Commercial property

Foreign investment in Australian commercial property doubles

Overseas buyers continue to be active in both buying and selling Australian business assets, according to a leading expert.

Ray White Commercial Head of research, Vanessa Rader said foreign investment in commercial real estate has nearly doubled in the past 12 months.

“The recent release of the FIRB’s annual report for 2020-2021 showed a 95.91% year-on-year increase in Australian property investment applications,” Ms Rader said.

“The 862 applications, which represent $82 billion in commercial properties, are an opposite trend to what we’ve seen in the residential market, with $10.4 billion approved versus $17.1 billion the previous year. “

Ms Rader said most of the investment has been in Australia’s biggest business markets.

“Commercial investment continues to be heavily biased towards the Sydney and Melbourne regions with strong volumes across all sectors, particularly the office market,” she said.

“The current uncertainty, particularly in the CBD office markets, around occupancy and rents is not a deterrent to those buyers who consider the yields on offer to remain competitive with other international markets, while the safety and vibrancy of our global cities is a strong indicator of confidence and future growth.

“The greatest interest in the Queensland market has come from strong population gains, particularly in the SEQ, while the announcement of the 2032 Olympics will do much to raise the profile of the state in the years to come and drive greater interest.”

According to Ms Rader, countries looking to invest in Australia have seen some changes.

“While the United States remains the largest investor, followed by Singapore, we have seen Germany increase their interest after several years of hiatus, particularly in the office and industrial sectors,” he said. she stated.

“Major pension funds continue to see Canada as a key investor in Australian property, while China has slipped down the list this year, largely influenced by a reduction in FIRB development applications in Australia as well as by stopping international students and migration. which in the past has boosted real estate (albeit residential) sales.

“Looking at recent transactions in early 2022, we can see that buyers from Asia have returned with Singapore, Hong Kong and Japan increasing their interest while US, Canadian and European buyers continue to transact.”

Ms Rader said she expects investment activity to remain strong for the rest of the year, with the upcoming election not affecting sentiment.

“The abundance of cash-rich investors and large trusts, funds, as well as the deep pockets of overseas buyers, will see continued strong investment in commercial real estate this year,” she said.