- North American investors represent around 39% of total foreign investment into Australia
- Industrial was the most popular sector
- CBRE expects retail investment to increase during 2022
Over $16.6 billion worth of foreign investment has gone towards Australian office, retail, industrial and hotel assets this year alone – a record.
The CBRE data revealed that North American investors led the change, accounting for around 39% of the total foreign investment, up from 26% in the five years leading to the pandemic.
CBRE Associate Director Tom Broderick noted the 2015 record of $15.5 billion was broken this year despite international border closures.
“Early in the pandemic, the conventional wisdom was that foreign investment would slow due to closed borders and an inability to inspect assets,” explained Mr Broderick.
“However, about 66% of the foreign capital deployed in 2021 has been in partnership with a local fund manager, which has bolstered purchaser activity.”
Tim Broderick, CBRE
North America and Singapore leads the way
After the North Americans, Singaporean investors accounted for 35% of this years activity, the second most active group.
“What surprised us was how quickly the industry innovated in regard to acquiring assets during this year’s lockdowns and how overseas capital found a way to compete for available properties, including teaming with local investment partners,” added CBRE’s Pacific head of Capital Markets Mark Coster.
“International capital is expected to play a continued strong role in the commercial property investment market next year, with Australia being viewed as an attractive proposition given the available returns and the relative strength of the economy compared to some parts of Asia, North America and Europe.”
Mark Coster, CBRE
Notable transactions occurring this year included the $925 million sale of a 50% stake in Grosvenor to Blackstone and the $3.8 billion sale of the Milestone industrial portfolio to a partnership between Singaporean sovereign wealth fund GIC and ESR Australia.
A Link REIT/EG Fund partnership included the acquisitions of a $538.2 million sale of a half stake in Sydney’s Queen Victoria Building, The Strand Arcade and The Galeries.
Offshore Investment by Sector in 2021
Industrial and logistics was the most invested asset class, closely followed by office. The latter included a major acquisition of a 49% stake in the Dexus Australian Logistics Trust by Blackstone.
For 2022, Mr Coster added that he expects a positive shift for demand in retail assets.
“The amount of international capital assessing retail assets has increased significantly during 2021 and we’re also fielding considerable interest in alterative asset classes such as life sciences and data centres,” he said.