New sales data from CBRE has revealed that offshore buyers accounted for almost half of all Australian commercial real estate sales in 2015.
In new figures released this week, the commercial property group said "unprecedented offshore buyer activity" was responsible for lifting Australian commercial property sales to $28.4 billion last year.
CBRE’s data takes into account sales of office, industrial and retail property valued at over $5 million. It highlights that 2015 transactions fell just 4 per cent shy of the record $29.6 billion tally set in 2014, with the high level of activity largely attributable to offshore buyers.
CBRE’s head of research, Australia, Stephen McNabb, said offshore investors purchased $11.7 billion of commercial real estate, accounting for 41 per cent of overall transaction activity – the highest annual percentage on record. Meanwhile, domestic purchases declined by 28 per cent.
“Rising volumes of offshore investment reflect the relative attractiveness of Australia’s commercial property yields in a period when interest rates have been close to 2 percentage points above major developed markets globally,” Mr McNabb said.
“The level of activity is also consistent with the trend towards globalisation and diversification. As a result of this, Australian investors are also beginning to export more capital offshore and we may see more of this in 2016, particularly as interest rates rise in overseas markets.”
The CBRE figures show that foreign investors were particularly active in the Australian office market – acquiring more office towers than domestic buyers for the first time since CBRE began tracking these measurements in 2005.
Overseas buyers accounted for 54 per cent of the annual office turnover, and while there was also an increase in offshore investor dispositions, net overseas investment in the office sector increased by $3 billion through the year.
CBRE executive managing director, capital markets, Mark Granter is confident that the momentum will continue into 2017.
“At the beginning of 2014 the expectation was that foreign investment activity might ease. However, it’s only grown stronger, with the available returns in Australia still more attractive than in the other gateway cities offshore,” Mr Granter said.
“The underlying property fundamentals in Sydney and Melbourne are helping to drive activity as occupier demand improves and vacancies decline, with these markets also benefitting from the fact that not too much new supply is being delivered.”