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Singaporeans have emerged as one of the active investors in Australian commercial property, having led two of the three most valuable transactions in 2016, reported The Australian, citing JLL analysis.
With foreign companies accounting for 40 percent of total transactions, foreign investment into the Australian commercial property market reached a record A$10 billion (S$10.5 billion) last year.
Singapore’s ARA Property Group and Ascendas-Singbridge, for instance, acquired the Southgate complex in Melbourne for A$578 million (S$605 million) and the Innovation Place (pictured) for A$313.2 million (S$328 million), respectively. South Korea’s Inmark Group, on the other hand, purchased the Woolworths headquarters at Bella Vista in Sydney for A$336.45 million (S$352 million).
Despite growing valuations, overseas interest in Australian property is expected to remain robust in the year ahead, said JLL Chief Executive Stephen Conry.
“The offshore investors have accounted for a rising proportion of major transactions in recent years,” he said.
Last year “was no exception, with foreign investors accounting for a record number of transactions across the Australian commercial property sector. We are detecting no decline in offshore interest in the Australian market, but the limiting factor is a scarcity of stock.
“We are certainly finding that offshore investors are willing to broaden their mandates, both in terms of locations and sectors.”
Simon Storry, Head of International Investments at JLL, expects the next wave of foreign capital to come from Japanese buyers.
Analysts expect the Japanese Government Pension Investment Fund (GPIF) to increase its exposure in commercial property, after it decided to reduce its holding of traditional low-risk bonds.
“Asian investors that remain the most active are from Singapore and China, but we are starting to see a greater level of interest from Japanese firms, both from a debt and equity point of view,” said Storry.
“GPIF is reviewing its strategy for investment in property given the size of the fund. This alone could have a major impact on Japanese investment in Australia.”
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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