New research by JLL has revealed that the number of foreign investment groups that are currently active in the Australian commercial property market has increased by 80 in the past 11 years.
In 2006 there we only seven foreign investment groups active in commercial property in Australia. Today there are 87 groups, and groups from the USA, China, and Singapore are the most dominant.
“The proportion of office acquisitions by offshore capital sources has steadily increased post the financial crisis in 2007 and reached an all-time high of 52 per cent in 2015,” commented Simon Storry, JLL’s head of international investments – Australia.
“Offshore capital sources were also a large seller of office assets in 2016. So strong activity on both sides of the ledger highlights divergent views on the outlook for capital values and the potential of investors to generate higher returns in certain markets across Australia.”
However, while the most interest currently comes from China, it has been predicted that a new surge of investment from other Asian countries, such as Japan and Korea, is on the cards.
“We will soon see a greater spread from Asia and south-east Asia,” commented Peter Mitchell, former chief executive of Asia Pacific Real Estate Association and current non executive director of Emerge Capital. “Since the GFC investors have become more risk averse so they are favouring more mature markets and, for Asia-based investors, that means Australia.”
According to JLL, the size of the investment pool in the Australian office sector alone is AUS $223.5 billion.
