April 2015 – Asian Investment

28 April, 2015 / Vanessa Rader and Rick Bird

Over the last two years, Asian investment into Australia has been strong. The “safe haven” of Australia has been particularly attractive given the stability of the economy, low interest rate environment, strong banking sector and in the last eighteen months improving currency position for investment.

Interest has been across all asset classes with investors keen to secure a combination of trophy office assets in major cities, hotel assets, quality retail offerings, prestige and residential development opportunities as well as rural holdings.

Over the last two years Asian capital inflows into Australia for major property purchases has totalled US$16.17 billion representing over 370 transactions across all asset classes. Of these, 156 transactions as been by Singaporean investors who are particularly active in the office and hotel asset classes, while China has also been a dominate player in Australian property purchasing over US$5.51 billion. Looking alone at development investment stock there has been close to US$3 billion transacted over the past two years; of this Chinese investors have dominated representing more than half of the total turnover across 48 transactions across Australia.

By location, Sydney is the favoured city for Asian investment dominating 55.89% of all transactions by value, Melbourne while representing similar number of transactions the volume of sales is significantly less; Brisbane then Perth are the remaining cities of interest. Encouragingly Gold Coast also features on this list, representing 12 transactions, half being development sites and remaining hotel and retail assets, Chinese investors favour this market purchasing eight of the 12 assets. Looking at development site activity Sydney and Melbourne are both strong markets of investment, Sydney while representing 27 transactions total US$1.35 billion, Melbourne has seen 44 sales being US$991.2 million, Brisbane still lags behind with only 12 transactions or US$269.3 million, similar to Perth with the same number of sales totalling US$206.1 million.

While foreign investment has been strongly focused on Asian funds into Australia, there is still a high volume of interest coming from traditional offshore nations. Over the past 12 months investment into the Sydney office market has been hotly contested, resulting in US$1.944 billion being invested by Canadian groups in major transactions across the metropolitan area, while US funds totalled an additional US$1.254 billion. While Chinese purchasers were also active in the office sector, their Asian neighbours invested just as heavily. Singaporean purchasers were most active in the office market purchasing US$884.3 million while they also dominated the Industrial sector purchasing US$492.7 million across 11 Sydney investments together with six hotel investments totalling an additional US$300 million.

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