After a record-breaking year for commercial property transactions in 2014, the sector fell “just four per cent shy” of the $29.6 billion tally, in 2015, research reveals.
Property group, CBRE’s head of research, Australia, Stephen McNabb, said foreign investors accounted for $11.7 billion of the $28.4 billion spent on commercial properties valued at more than $5 million, reflecting the relative attractiveness of the yields on offer from Australian assets.
However, McNabb reported that domestic purchases decline by 28 per cent in 2015, compared with 2014.
“Rising volumes of offshore investment reflect the relative attractiveness of Australia’s commercial property yields in a period when interest rates have been close to two percentage points above major developed markets globally,” he said.
“The level of activity is also consistent with the trend towards globalisation and diversification.
“As a result of this, Australian investors are also beginning to export more capital offshore and we may see more of this in 2016, particularly as interest rates rise in overseas markets.”
CBRE executive managing director, capital markets, Mark Granter, said overseas buyers accounted for more than half of all transactions in the office market, with Sydney and Melbourne proving particularly attractive, a trend he believes will continue into 2017.
“At the beginning of 2014 the expectation was that foreign investment activity might ease however it’s only grown stronger, with the available returns in Australia still more attractive than in the other gateway cities offshore,” he said.
“The underlying property fundamentals in Sydney and Melbourne are helping to drive activity as occupier demand improves and vacancies decline, with these markets also benefitting from the fact that not too much new supply is being delivered.”
