- NSW recorded $5.9B in transactions, followed by QLD and VIC with $2.8B each
- Alternative assets were the top category during Q4
- Flurry of activity for early 2022 as deals are finalised
Commercial real estate transactions reached an Australian record during the final quarter of 2021, according to the latest Cushman & Wakefield Investment Marketbeat report.
Almost $20 billion was transacted, in a sign this sector of the market didn’t slow down despite Covid-induced disruptions throughout the year.
New South Wales led with the way, recording $5.9 billion in transactions with Queensland recording $2.8 billion, resulting in both its strongest quarter since 2017 and equalling the Victorian total. This is despite Queensland having a smaller population than Victoria.
Western Australia recorded $1.8 billion – an all-time high.
Foreign investment rebounded during the quarter from $3.5 billion in Q3 to $8 billion in Q4. Across 2021, there was a record $24.1 billion in yearly offshore investments.
During Q4 US investors topped inflows with $2.6 billion, although outflows were reported to be $3.97 billion. Singaporean investors recorded inbound investment of $500 million.
‘Other’ the top asset….
The alternative asset or ‘other’ category led quarterly investment volumes with $8.2 billion – the first time this has occurred since Cushman & Wakefield began the series. Such a deal included Charter Hall’s $1.7 billion takeover of ALE Property and the $1.3 billion acquisition of Jandakot Airport.
The industrial market saw $5.4 billion in transactions – the second largest on record, only surpassed by the $8.3 billion during the June quarter. The retail sector witnessed a rebound, recording $3.3 billion in transactions – the second-highest quarter volume to date.
Due to a backlog of major CBD deals, the office sector slowed during the quarter to $2.7 billion.
The Sydney metropolitan market led the way, with deals such as the $463.3 million sale of the Bella Vista Woolworths headquarters to AIMS APC RET and the purchase of Blue & William In North Sydney by Lendlease and Singapore-based Keppel REIT for $327.7 million.
Flurry of activity for early 2022
Simon Fenn, Cushman & Wakefield’s managing director for Australia and New Zealand, said activity was significantly elevated during the end of 2021 due to institutional investors closing major deals
“Alternative asset classes topped the deal tables, with a run of portfolio transactions, while industrial continued to attract record demand,” said Mr Fenn.
“ A number of major office transactions approached completion during Q4, creating a flurry of activity early in 2022 as deals are finalised.
“With a significant pipeline of office assets on-market, we expect investment to remain elevated in the year ahead.”
John Sears, head or research Australia and New Zealand for Cushman & Wakefield, added both global and domestic investors targeted a diverse range of properties, focusing on yields.
“While rising inflationary pressures may temper demand globally, local interest rates are expected to main relatively low in 2022.
“Compared to overseas CRE investments, Australian assets provide attractive returns, and the broader reopening of the economy should support demand over the next 12 months,” Mr Sears concluded.
