- Figure falls short of the $46B recorded last year
- Medical and industrial assets hit record-highs
- Foreign buyers highly active, notably with office assets
While non-residential property transactions have fallen over the past year due to the pandemic, demand for commercial property remains strong with medical and industrial assets reaching all-time highs.
Casey Robinson, m3property research director, said there have been close to $41.7 billion in sales of commercial property, down slightly (-10%) compared to last year’s total of $46 billion.
Note, these figures cover sales of properties above $5 million.
“Demand for industrial remained high increasing by 34% on the previous financial year with the Blackstone Milestone and Fife portfolio acquisitions boosting the sales volume (with) the industrial sector seeing $14.95 billion in transactions across the major cities of Australia,” said Ms Robinson.
“The office sector followed with $15.69 billion but this figure is well down (-34%) on the $21 billion recorded in the previous financial year. Despite this, demand for suburban office assets was strong.
“Medical asset sales rose by more than 85% with $1.01 billion in sales compared to $545 million on the previous year as investors sought low-risk properties. The institutions have become increasingly active in this sector over the past five years with Dexus and Centuria being the most active buyers.”
Casey Robinson, m3property research director
It appears investors grew anxious about aged care and retirement homes – sales of these assets plummeted 77% to $812 million. This is despite reaching a record high during the previous financial year; aged care home sales were up by 500% with retirement village sales up by 300%.
Foreign buyers remain highly active with their take in industrial increasing by 44% compared to 23% the previous year – a figure inflated by the Blackstone deal, according to Ms Robinson.
“Foreign buyers were also big investors of office representing 53% of sales over the past year while retail sales were dominated by institutions who have made up for 35% of all deals.”
Ms Robinson added that while it was expected yields would soften across the board, yields have tightened across several asset classes over the past year. Industrial, single-tenanted large format retail and convenience-focussed retail centres were the standouts.
Total national sales volume FY 2021
Notably, CBD office markets, which witnessed depressed sales volumes, have seen their yields hold to tighten over the year in prime buildings.
Sydney made up the bulk of non-residential sales at just over $16.9 billion, followed by Melbourne with $10.5 billion.
In terms of office transactions, Sydney had the largest share with almost $8.5 billion in deals.
Melbourne enjoyed the most industrial sales at $5.36 billion – an extraordinary 90% increase on the previous year.
Across the board, sales fell in Brisbane – excluding the medical sector where $215 million in deals occurred.