Europe and Middle East fix eyes on Australian property: Ashurst
Middle Eastern and European pension funds continue to flock to Australian real estate with the Swiss, Swedish and Dutch in particular looking at alternate property classes in which to invest.
Ashurst practice leader investment real estate John Stawyskyj says European and Middle Eastern real estate funds — which the firm represents — are looking to develop property in Australia.
“The sweet spot is in the order of $500 million (but) it is difficult to find assets of that size,” Stawyskyj says.
Ashurst clients such as Dutch Pension fund APG, which manages the pension assets for 4.5 million Dutch citizens, Swiss group AFIAA Foundation and Sweden’s SEB are interested in alternative real estate development such as student accommodation and logistics development such as bulky goods warehouses.
“They are capitalising on growth in internet shopping,” adds Ashurst partner Pauline Tan.
Australia is still the first port of call for Europeans wanting to get into Asia
Tan says there is also an emerging interest in the development of luxury student accommodation. She says luxury student accommodation development is in the pipeline in inner-city locations including Brisbane’s Vulture St, Latrobe St in Melbourne and Abercrombie St in Sydney’s Chippendale.
International-backed Scape Student Living is behind a drive to develop luxury student accommodation while APG is looking at finding alternative uses for student accommodation over the Christmas holidays such as providing conferencing facilities.
“It used to be that if you build, overseas investors will come, now they have to build it themselves,” Tan says.
Despite the new initiatives, Ashurst, which represents up to 100 real estate clients, says transaction volumes had dropped.
The sweet spot is in the order of $500 million (but) it is difficult to find assets of that size
“Transaction volumes are down but that is a factor of the record years of transaction flows and deal size. We had the Investa office portfolio and the 32 hotel TAHL portfolio,” Stawyskyj says.
“We have had 13 years of continuous growth, stability and transparency. Australia is still the first port of call for Europeans wanting to get into Asia.”
“They will acquire assets here as a foothold. Assets will then be bolted on in other Asian areas.”
He says Brexit has caused some funds to refocus on Australia. “We had a potential client looking at investing in Australia and the United Kingdom. After Brexit, they told us not to worry about the UK,” he says.
“Brexit has given us more work. The larger international residential developers are way more focused on this area.”
This article originally appeared on www.theaustralian.com.au/property.
