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Australia registered a jump in commercial property transactions involving foreign investors in 2020, with Singaporeans making up the vast majority of offshore investment activity.
Investors from Singapore emerged as one of the most active offshore groups in Australia’s commercial property market, injecting A$2.28 billion (S$2.26 billion) this year, reported Commercial Real Estate citing JLL.
Australia registered a jump in commercial property transactions involving foreign investors in 2020, albeit overall sales remain lower than that posted last year.
JLL data showed that offshore groups accounted for around 44% of total investment volumes across retail, industrial and office property markets, up from 34% in 2019.
“The most active offshore groups in 2020 have been from Singapore [$2.28 billion], Germany [$1.3 billion] and China [$1.29 billion], which have made up the vast majority of offshore investment activity,” said Fergal Harris, Head of Capital Markets for Australia at JLL.
He cited the 50% stake sale in Grosvenor Tower to Chinese Investment Corp as evidence of continued demand for Australia’s commercial property.
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The Chinese sovereign wealth fund is now seeking approval from Foreign Investment Review Board, with settlement expected in early next year.
“JLL jointly transacted the biggest office transaction for 2020 on behalf of Dexus, for a 50% interest in Grosvenor Place in Sydney for A$925 million (S$915.6 million). This conditional exchange of contracts is a big vote of confidence from foreign investors in the Australian market and demonstrates the strength and attractiveness of our capital markets,” said Harris.
However, sales volumes for Australia’s commercial property market this year is expected to remain lower versus last year.
Sales currently stands at A$13.63 billion (S$13.5 billion), and JLL expects about A$2 billion (S$1.98 billion) worth of transactions for December. When combined, the total will still be lower versus the all-time high of A$36 billion (S$35.6 billion) last year.
Meanwhile, Andrew Ballantyne, JLL’s Head of Research for Australia, believes the Australia government’s strong response to the pandemic had reassured foreign investors of the merits of the local market.
“The response from policy makers in Australia has been unprecedented. This has provided downside protection to the Australian economy and a framework for an economic recovery in 2021,” he said.
“Australia’s reputation has been enhanced through the management of the health crisis,” added Ballantyne.
He revealed that offshore capital in 2020 had been focused on “high quality assets with strong covenants and long lease terms”.
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