Foreign investment in Australian commercial property reaches new highs‏

Offshore investors dominated commercial property sales activity in Australia in Q3, snapping up over half of the $8.6 billion in property traded during the period according to new CBRE data.

CBRE’s sales analysis takes into account sales of retail, industrial and office property valued at over $5 million.

It shows that offshore buyers accounted for 56% of total sales, by value, during the quarter under research - marking the highest proportion recorded in the ten years of CBRE records.

CBRE’s Australia head of research, Stephen McNabb said the high level of overseas purchasing activity had pushed total sales in the quarter 8.5% higher than the corresponding quarter last year. 

The current level of transaction activity may eventually reach or even eclipse the record $29.6 billion in annual sales recorded during 2014.

“The major source of new capital has been China, with Australia attracting close to 25% of the US$6.5 billion in Chinese investment capital released into global real estate markets in the first half of this year.” said Mr McNabb.

CBRE executive managing director in capital markets, Mark Granter said the surge of Chinese capital had been initially driven by private investors and developers but was now being also propelled by major institutional investors.

Singapore’s Ascendas Real Estate Investment Trust was very active during the period of investment, having snapped up a portfolio of 26 logistics properties from GIC in a deal valued at $1.01 billion. 

Another major Australian acquisition in Q3 included the $2.5 billion purchase of the Investa portfolio by China Investment Corporation. 

Mr McNabb noted that net investment position of offshore investors continued to grow and now totalled $24 billion since 2006.

However, he also brought attention to the fact that a number of the larger offshore transactions in Q3 – such as that of the GIC portfolio – involved sales by existing offshore owners.