- 45% of Sydney office investments came from overseas
- Mostly comprised Singapore and Canada
- National figures show 37% came from overseas
Australia remains an attractive market for foreign investors, and established markets in Sydney have benefited considerably.
JLL reported that the first half of 2021 saw overseas investors put $938.3 into Sydney offices. That comprises 45% of the $2.08 billion investment activity for the half-year.
While China was previously a dominant player, that is no longer the case.
The majority of investment activity came from Singapore, investors from the little red dot took out $515 million of Sydney office property.
Canada also saw promise in the market, parting with some $400 million.
In a separate report, Savills found strong interest for commercial assets came from Hong Kong, Malaysia and Singapore; Savills sold several commercial assets over H1 including a Lane Cove Arcade, offices in The Rocks, and 398 Sussex Street.
Luke Billiau, JLL head of capital markets, said interest in the Australian market is due to a unique selling point:
“Australia remains to be the only geography in Asia Pacific with real estate allocations below target (4% below a target of 11.5%), which will continue to drive cross border capital investment.”
Luke Billiau, JLL head of capital markets
Construction of Sydney Metro has also left the city with 49,000 square metres less office space, as the project compulsorily acquires 11 buildings.
“The scarcity of stock has encouraged investors into other established metropolitan commercial markets including Macquarie Park and Sydney Olympic Park supporting strong demand for prime office investments,” Mr Billiau said.
Preliminary figures for the rest of Australia also show elevated levels of foreign investment remained.
JLL said for the first half of 2021, “offshore investors accounted for 37% of the total $1.87 billion investment activity into the office sector.”
Fergal G Harris, JLL head of capital markets said 2021 it is a strong start to 2021:
“National commercial property transaction activity is tracking well ahead of 2020 levels at the half year mark, with JLL’s preliminary figures at $16.56 billion year-to-date. This compares to the full year sales last year of $20.2 billion.”