Offshore buyers spend big down under

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OFFSHORE investors have committed nearly $16 billion into Australian office and industrial assets so far in 2021, while the retail market is set to be dominated by domestic institutional buyers.

According to m3property, overseas investors have spent $7.53 billion in the Australian industrial sector  this year, with sales being boosted by 11.85% on 2020 levels.

This comes after significant transactions including Singaporean sovereign wealth fund ESR and GIC acquired 45 assets from private equity firm Blackstone’s Milestone portfolio in April for $3.8 billion.

“Sales turnover across the country had been steadily increasing for several years reaching an all-time high in 2019 where there was $27.6 billion in office sales, $10 billion in industrial deals and $9.9 billion in retail sales,” said Casey Robinson, national research specialist for m3property.

Foreign buyers have also invested $7 billion so far this year on office assets, with offshore investment into this sector up 20% on 2020 exposure levels.

“In 2019, offshore buyers made up for around 40% of the office deals with $12 billion invested in this sector and around 25% of industrial and retail deals.”

Overall since the beginning of 2021, commercial transactions from both domestic and international buyers have reached $14.3 billion in the office sector, $13.7 billion in the industrial sector and $7.56 billion in the retail sector.

“We have already surpassed the 2020 total where there was $11.27 billion in office sales, $12.27 billion in industrial and $5.15 billion in retails transactions,” added Robinson.

Offshore investors are continuing to reduce their exposure to the Australian retail sector however, making net disposals nearing the range of $2 billion.

“We expect over the short to medium term that this class of buyer will cast their net wide and include other assets such as medical, health and other more specialised assets,” said Robinson.

Meanwhile, domestic institutional investors are set to have their biggest year in retail net acquisitions since 2015.

“The Australian property markets have always been keenly sought after by foreign investors and this appetite shows no sign of starving itself,” added Robinson.