Sydney most popular destination for foreign investors
According to CBRE’s 2016 Global Investor Intentions Survey, Australia is at the top of the buy list for cross border investors in Asia Pacific. This is the first time that Australia has been at the top of the buy list.
Within the Asia Pacific region, Sydney is now the most popular destination followed by Tokyo, Shanghai, Singapore and Brisbane. Sydney and Tokyo have switched places since 2015 and there are now two Australian cities within the top five.
The survey reveals that 25% of cross border APAC investors see Australia as the most attractive country for their investment, and has become more attractive since it overtook Japan in rankings.
Within the APAC region, Australia, Japan and China combined were favoured by 60% of respondents and seen as the top three investment markets.
The CBRE Asia Pacific Investor Intentions Survey 2016 is based on over 300 responses from right across the region, giving insight into investors’ main concerns, priorities and strategies for the coming year.
At the moment, buying intentions within Asia Pacific remain largely positive and 82% of respondents plan to buy at a similar level or more than in 2015.
However, buying intentions have softened for the second year running, mainly because of concerns over slower regional economic growth, high asset prices, as well as the last two years being a particularly active time in the market.
Although Offices remained the top sector for the third consecutive year, the survey saw a slight increase in intentions for investment in real estate, alongside student housing, retirement living and healthcare.
Logistics also retained its position as the second more popular sector, whilst investor interest in shopping centres and high street retail also increased.
Further to this, offices and retail within Australia are also seen as the most attractive country and sectors. Investors continue to find real estate appealing due to the relatively higher returns and stability on offer. According to the survey, there is more than US$1 trillion capital targeting commercial property investment in 2016, which should help support current pricing levels.
Interest in cross-border investment also remains strong, with two in five respondents stating that they are seeking opportunities outside their home region.
CBRE Head of Research, Australia, Stephen McNabb said the findings were supportive of another strong year for investment in the Australian commercial property market.
“With APAC accounting for three quarters of the capital inflow to Australian real estate last year, this means we can once again expect firm investment volumes in 2016. Chinese and South Korean investors both expect to remain net purchasers this year, which will ensure continued strong inflows from these particular markets,” Mr McNabb said.
According to CBRE’s Pacific Executive Managing Director, Capital Markets, Mark Granter, investors in South Korea are becoming increasingly active in Australia’s commercial property market last year. The total investment from South Korea has also doubled in the past 12 months.
Mr Granter stated, “South Korean investors are switching to higher returning investments in offshore real estate, infrastructure, equities and hedge funds. This bodes well for continued investment in Australia this year, with South Korea buyers having the potential to be significant players in the Australian property market in the years ahead”.
Although investment is expected to remain strong during 2016, there remain concerns over the performance of the global and regional economy. In particular, half of investors stated that they were worried about a combination of global economic weakness, a slowdown in their domestic economy and the Chinese economy.
Although these issues might make the news, it is believed that these issues are not strong enough to derail the global economy, which is expected to remain positive.