Australia on track for $30b commercial property year

Overseas investors continue to plough money into Australian commercial property at an unprecedented rate, with more than half of the $8.6 billion worth of deals in the third quarter of 2015 originating offshore.

CBRE research shows that offshore buyers accounted for 56% of retail, industrial and office sales over $5 million during the quarter – the highest proportion in the 10 years that CBRE has been keeping records.

As a result, sales during the quarter eclipsed the corresponding period last year by 8.5%.

Much of that investment has come from China, with a quarter of all Chinse investment landing here.

Record breaker: $1.073b GIC deal makes Australian history

CBRE head of research, Stephen McNabb, says Australia is on track for a record-breaking year.

Stud Park Shopping Centre’s $145 million sale was one of many large transactions in the third quarter of the year

“Given the current level of transaction activity we are on pace to reach the record $29.6 billion in annual sales recorded during 2014,” McNabb says.

The surge in offshore capital entering Australia was driven by a number of key deals in recent months, including the China Investment Corporation’s $2.5 billion purchase of the Investa portfolio, and the recent sale of the GIC portfolio to Singapore’s Ascendas Real Estate Investment Trust.

As expected, we are starting to see the larger Chinese life insurers target opportunities here as they look at geographic diversification to balance their investment portfolios

McNabb says international buyers aren’t done yet, with more major sales expected in the final three months of the year and beyond.

“There is new capital being unlocked from Asia with zero or low weighting to Australia, which should continue to support the net offshore investment picture in the coming year, at least,” he says.

Going strong: No Chinese slow down on commercial investment

CBRE executive managing director of capital markets, Mark Granter, says China’s insurers have finally arrived in force, after months of speculation about how heavily they would target Australian assets.

“As expected, we are starting to see the larger Chinese life insurers target opportunities here as they look at geographic diversification to balance their investment portfolios,” Mr Granter said.

“These investors are targeting major gateway cities, with Sydney and Melbourne being high on the radar alongside destinations such as New York, London and Singapore.”