Offshore investors dominated commercial property sales activity in Australia for the third quarter of 2015, according to new research by property multinational CBRE.
Data released by the real estate group shows that offshore investors snapped up over half of the $8.6 billion in commercial property during the period, accounting for 56 per cent of sales – the highest proportion ever recorded by CBRE.
CBRE’s head of research in Australia, Stephen McNabb, said the high level of overseas purchasing activity had pushed total sales in the quarter 8.5 per cent higher than the corresponding quarter last year.
“Given the current level of transaction activity, we are on pace to reach the record $29.6 billion in annual sales recorded during 2014,” he said.
“The major source of new capital has been China, with Australia attracting close to 25 per cent of the US$6.5 billion in Chinese investment capital released into global real estate markets in the first half of this year.”
CBRE’s executive managing director of capital markets, Mark Granter, said the surge of Chinese capital had been initially driven by private investors and developers, but was now also being propelled by major institutional investors.
“As expected, we are starting to see the larger Chinese life insurers target opportunities here as they look at geographic diversification to balance their investment portfolios,” he said.
“These investors are targeting major gateway cities, with Sydney and Melbourne being high on the radar alongside destinations such as New York, London and Singapore.”
Mr Granter added that a number of the larger offshore transactions also involved sales by existing offshore owners.
“It wouldn’t be surprising to see some offshore investors with high existing weightings to Australia looking to recycle capital into other global markets as opportunities evolve in the rest of the world,” he said.
“However, at the same time, there is new capital being unlocked from Asia with zero or low weighting to Australia, which should continue to support the net offshore investment picture in the coming year, at least.”