Singapore investors set sights on Australian commercial property
Singaporean investment houses are flexing their muscles in Australian property, with the island nation’s institutions and private developers looking to pick up key portfolios and towers as the market heads into the busy year-end period of deal-making.
Mapletree is now among the leading contenders for a $650 million-plus office portfolio being offered by US giant Hines Global REIT that spans four towers in Brisbane, Sydney and Melbourne.
In retail, both the giant Keppel group and sovereign wealth fund GIC have struck $1 billion-plus transactions with the listed Vicinity Centres.
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Commercial markets in Australia have been hit with a tide of new stock, with towers for sale along the eastern seaboard and in the resources capital of Perth.
This has prompted concerns about the depth of demand as some local players step back, but the crucial Singapore investors are keen to buy. JLL head of international capital for Australia, Stuart McCann, says Singapore’s developers will form a new wave of capital targeting local office deals.
Singaporean capital remains strong with a number of mandates actively seeking opportunities in Australia
He tips they will join the Hong Kong billionaires and the Singaporean institutions and REITs that have picked up towers in the past two years.
McCann says they are being driven by rising residential land values in their own market and tough stamp duty charges introduced this year that placed pressure on development returns.
“From a risk-adjusted return perspective, Australian office is looking attractive, provides diversification benefits, and inflows are being supported by a strong Singapore dollar, which is currently trading at just over parity to the Australian dollar,” he says.
Singapore’s Soilbuild REIT has bought a Canberra office complex for $55 million.
JLL estimates that nearly $5 billion worth of Singaporean capital poured into Australian property since the start of 2017 and the country accounted for about 28% of inflows last year.
Singaporean institutional investors and REITs are also broadening their scope as they hunt for yield around the country.
GIC, via Charter Hall, acquired Brisbane’s Santos House and also bought in Perth, Mapletree bought in Adelaide and new entrant Soilbuild REIT purchased in Canberra and Adelaide.
GIC, which is offering a half-stake in Sydney’s landmark Chifley Tower, has also pushed into new areas, including student accommodation, with other Singaporean groups to follow suit.
Australian office is looking attractive, provides diversification benefits, and inflows are being supported by a strong Singapore dollar
At the same time, ARA Asset Management’s stable of trusts is targeting core assets, looking to add a stake in Melbourne’s Southgate complex, and Keppel’s main listed trust is part-funding the development of the new police headquarters in Melbourne.
Agencies are also positioning Singaporean buyers for off-market deals.
“Singaporean capital remains strong with a number of mandates actively seeking opportunities in Australia,” CBRE’s capital markets, NSW state director Michael Andrews said.
Cushman & Wakefield international director, capital markets, Richard Butler says a new breed of private groups including Firmus Capital, Rockworth and listed peers Keppel REIT, Chip Eng Seng, Roxy-Pacific and Tong Eng have become regular investors.
Knight Frank head of capital markets, Asia-Pacific, Neil Brookes, says nervousness about China, and record high pricing in Hong Kong and Singapore have pushed money out of the region, resulting in Singaporean groups targeting the developed markets of Australia, Britain and the US.
This article originally appeared on www.theaustralian.com.au/property.
