Asian investors size up Canberra office market

According to Knight Frank’s Associate Director, Institutional Sales, Canberra, Nic Purdue, there are numerous signs that point to a stronger market and more diversified attention on the capital city this year.

 

“Recent positive economic signs in Canberra are expected to help underlying market fundamentals," he said.

 

"This includes a far more stable vacancy rate, stable incentives and forecast rental growth – all signs that the Canberra commercial market has reached the lowest end of its cycle.” 

 

Nic said that investors from Asia are looking increasingly towards the Canberra market due to its secure, long-term government tenants. 

 

“The current wave of Asian capital is looking to diversify away from Australia’s core markets and into higher-yielding regions, such as Canberra.

 

“With some volatility in global markets, Canberra is increasingly being considered as a safe haven within the context of the wider Australian market place.

 

"Australia remains attractive for offshore investors who are drawn by the low Australian dollar, cost-effective borrowing and government stability and should the global volatility continue there will be a case for the RBA to keep rates on hold, adding to the attractiveness of Canberra as a market."

 

“We are already receiving increased interest from Asian countries including Korea, Singapore and Malaysia.

 

"In December 2015 Korea’s FG Asset Management purchased the Louisa Lawson Building for approx. $225 million and we anticipate that this significant transaction will lead to more interest from these groups in 2016.” 

 

Mr Purdue said that Canberra hasn’t yet seen the influx of Chinese investors in the commercial market, although the residential market has seen plenty of interest. 

 

“Canberra’s commercial sector hasn’t yet seen the levels of demand from Chinese investors that other capital cities have seen, but that could also change.” 

 

According to Nic, hotel buyers from Asia are seriously considering Canberra at the moment and actively seeking opportunities.

 

“In addition to interest in the commercial office sector, we have recently received several enquiries for hotels in Canberra on behalf of Asian hotel groups," he said.

 

"We expect this interest to continue.”

 

A final factor that may have a positive impact on the flow of Asian investment into Canberra, according to Nic, is the potential upcoming announcement by Singapore Airlines that they may look at initiating direct flights between Canberra and Asia. 

 

“As reported in the media over the past week, if Singapore Airlines does create a direct flight route between Canberra and Asia, this will continue to build the case as an investment destination for Asian investors,” he concluded.