Foreign investment in office, retail, industrial and hotel assets in Australia has reached $16.6 billion in 2021 according to CBRE, surpassing the previous record of $15.5 billion set in 2015.
Investors from North America accounted for about 39 per cent of the total foreign investment during the year, up from an average of 26 per cent in the five years prior to the pandemic.
“Early in the pandemic, the conventional wisdom was that foreign investment would slow due to closed borders and an inability to inspect assets,” said CBRE associate director Tom Broderick.
“However, about 66 per cent of the foreign capital deployed in 2021 has been in partnership with a local fund manager, which has bolstered purchaser activity.”
Singaporean investors were also found to have increased their investment activity in Australian commercial property in comparison to the period prior to the pandemic, accounting for 35 per cent of foreign investment during 2021.
Forty-five per cent of offshore investments by value were made in the industrial sector, closely followed by 43 per cent in the office sector.
“What surprised us was how quickly the industry innovated in regard to acquiring assets during this year’s lockdowns and how overseas capital found a way to compete for available properties, including teaming with local investment partners,” said CBRE Pacific head of capital markets Mark Coster.
Among the major transactions highlighted by CBRE are the $925 million sale of a 50 per cent stake in Grosvenor Place to Blackstone and the $3.8 billion sale of the Milestone industrial portfolio to a partnership formed between Singapore’s GIC and ESR Australia.
“International capital is expected to play a continued strong role in the commercial property investment market next year, with Australia being viewed as an attractive proposition given the available returns and the relative strength of the economy compared to some parts of Asia, North America and Europe,” said Mr Coster.
While retail only accounted for 5 per cent of the combined dollar sum of offshore investments in 2021, Mr Coster suggested the sector may see a shift in demand in the next year.
“The amount of international capital assessing retail assets has increased significantly during 2021 and we’re also fielding considerable interest in alternative asset classes such as life sciences and data centres,” he said.
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
