Despite Severe COVID Lockdowns in 2021, Australia Enjoys Record Foreign Commercial Investment
E-mail Sign up for our free weekly newsletter
According to CBRE, foreign investment in Australian commercial real estate has hit a new annual record despite international border closings, with $ 16.6 billion.
New CBRE data shows North American investors led the indictment, accounting for about 39% of total foreign investment that year, according to Tom Broderick, associate director of CBRE.
“Despite international border closings, foreign investment in 2021 exceeded the previous record of US $ 15.5 billion from 2015,” said Broderick.
“At the start of the pandemic, popular belief was that foreign investment was slowing down due to closed borders and the inability to inspect assets. However, about 66% of the foreign capital employed in 2021 was used in partnership with a local fund manager, which increased buyer activity. “
CBRE’s analysis shows that North American investors were particularly active, accounting for around 26% of foreign investment in Australia in the five years leading up to the pandemic.
Singaporean investors were the second most active group of buyers this year, accounting for 35% of this year’s activity, also above the pre-pandemic average.
CBRE’s Pacific Head of Capital Markets Mark Coster noted that activity in 2021 was stronger than expected given the international border closings.
“What surprised us was how quickly the industry innovated in terms of asset acquisition during this year’s lockdown and how foreign capital found a way to compete for available real estate, including working with local investment partners,” said Coster.
“International capital is expected to continue to play a strong role in the commercial real estate investment market over the next year, with Australia viewed as attractive given the returns available and the relative strength of the economy compared to some parts of Asia, North America and Europe. ” . “
Major foreign investor transactions this year include the groundbreaking sale of a 50% interest in Grosvenor Place for $ 925 million to Blackstone; the sale of Milestone’s $ 3.8 billion industrial portfolio to a partnership between GIC and ESR Australia; the sale of half a stake in Sydney’s Queen Victoria Building, The Strand Arcade and The Galeries for $ 538.2 million to a Link REIT / EG Funds partnership; and the $ 315 million Sofitel Wentworth Sydney Hotel to KKR, Futuro Capital and Marprop.
In terms of total value, Industrial & Logistics was the most invested asset class, closely followed by Office, after large portfolio sales such as the Milestone deal and Blackstone’s acquisition of 49% of the Dexus Australian Logistics Trust last week.
Going forward, Mr Coster hinted at a potentially positive shift in retail demand in 2022.
“The amount of international capital valuing retail real estate has increased significantly over the course of 2021, and we also have significant interest in alternative asset classes such as life sciences and data centers,” said Coster.
Offshore investments by sector in 2021