Sydney has emerged as one of the top four destinations for international property investors, ranking ahead of New York and Paris, a survey by global property group CBRE has found.
In the hunt for yield in the global low-interest environment, Australia's biggest city is widely viewed from offshore as an attractive place to invest, the survey shows.
This comes as Australia's big real estate investment trusts (REITs) all reported improved leasing and retail sales conditions for the quarter ended March 31, with some tapping the demand for urban renewal projects.
Goodman Group, the country's largest industrial property trust, on Wednesday said it is selling non-core industrial sites for residential redevelopment, with $700 million of sites conditionally contracted for sale in Sydney. CEO Greg Goodman said the group's external assets under management increased to $25.4 billion, up $3 billion from June 30 last year, helped by development completions, rising property valuations and currency movements.
The appeal of investing in property is reflected in CBRE's Global Investor Intentions Survey 2015, which found that 53 per cent of respondents planned to increase property purchases this year. Along with that, investor appetite for cross-regional acquisitions has increased significantly, with 38 per cent of respondents intending to invest outside their own region this year – up from 28 per cent in 2014.
London retained its position as the world's most sought-after city for investors, followed by Tokyo and San Francisco. Sydney ranked fourth, ahead of New York.
Offices and industrial assets such as warehouses remained the preferred asset classes globally, driven by the growth of e-commerce.
CBRE national director capital markets Josh Cullen attributed Sydney's high ranking to the continued demand for Australian investment opportunities.
"This ranking is no surprise, with Australia offering some of the highest returns on a global basis across all our core sectors, with returns on secondary assets being even more attractive. We are starting to see positive signs in the office sector in a range of Australian CBD markets, which will underpin growth expectations," he said.
While office and industrial property are high on the list of investors, it is expected the record low interest rates in Australia will also provide a boost for owners of retail property such as shopping centres.
Retail property funds Federation and Novion Property, which are planning to merge managing a combined $22 billion worth of retail property, said on Wednesday food and international fashion brands sales and mall redevelopments contributed to improved trading results in the March quarter.
