Asian buyers snap up $2.09bn worth of Aussie offices
Offshore private investors have been snapping up Australian office assets at a faster pace over the past year, looking for yield in a nation seen as a relative safe haven.
The volume of office stock bought by offshore privates jumped 59% to $2.09 billion in fiscal 2017, according to the Colliers International’s latest capital markets review. Of this, $1.05 billion of office investment came from China. Investment from Hong Kong and Singapore jumped to $906 million in 2017, from just $73 million a year earlier.
The wave of funds was due to the search for yield and the growing perception around the world that Australian offices were a “safe haven” investment, Colliers International’s national director of research Anneke Thompson says.
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“The improving leasing markets, particularly in Sydney and Melbourne, are also helping drive investor confidence in the outlook for capital appreciation of core office assets,” Thompson says.
In a notable deal, the Exchange Centre at 20 Bridge St in Sydney sold to Hong Kong billionaire Francis Choi for $335 million on a sharp passing initial yield of 3.9%.
Local private investors had also been active buyers of office assets, spending a total of $1.9 billion in the largest purchasing volume since 2008. For example, the Coombes family bought 28 O’Connell St in Sydney for $91 million and the Juilliard Group bought 825 Bourke St in Melbourne for $72.7 million.
Overall, the report found that investment across office, retail, industrial and hotel assets was $28.99 billion during the year, of which 28% or $8.19 billion was to foreign buyers.
Some $12.51 billion went to NSW and $8.33 billion to Victoria. Strong demand and extra infrastructure investment were creating opportunities for local developers, Colliers International’s managing director of capital markets and investment services John Marasco says.
“These development hot spots in Sydney and Melbourne will cement these cities’ reputations as globally competitive cities for both capital and tenants,” Marasco says.
In the retail sector, investment slipped 13% to $6.64bn in the year as deals centred on neighbourhood rather than sub-regional centres.
The total value of industrial assets sold was $6.1 billion, with most deals taking place on the eastern seaboard.
The proportion of offshore buyers of industrial assets also rose, to 35% of sales volume, from 29% the prior year. Most capital came from the US and Singapore.
This article originally appeared on www.theaustralian.com.au/property.
