Commercial property investor sentiment in Australia (alongside New Zealand and Taiwan) has remained upbeat in tandem with a particurlarly positive outlook for the Pacific region, according to CBRE’s latest Investment ViewPoint report.
With the Australian economy in good shape relative to other regions, the report says the country’s commercial property sector is “something of a safe haven for investors away from the instability currently affecting the United States and Europe”.
“Barring any major shocks or other unforeseen events, the outlook for the next few months is positive and there is a strong pipeline of deals, particularly in Australia, Japan, Korea and Singapore,” says CBRE executive director of global research and consulting Kevin Stanley.
The September report highlights a steady flow of transactions in Australia underpinned by sustained offshore buyer demand for quality office properties.
Noteworthy transactions included the $117 million acquisition by Chinese multinational HNA Group of a 22-storey office building at 1 York Street.
HNA, whose core business is focused on air travel, logistics and financial services, has previously acquired property in New York.
Rick Butler, CBRE senior managing director of international investments, says it remains to be seen if this deal will herald a significant pick-up in Chinese investment activity in Australia.
“Whilst the deal is certainly an interesting one, it is not likely to mark the beginning of an immediate trend towards increased Chinese investment in Australian commercial property,” he says.
While future investment from Chinese firms is uncertain, for the year to date offshore buyers have remained very active in Australia, accounting for $3.19 billion in deals – or 40% of commercial real estate transactions (the highest share in close to two decades).
“Investors from overseas continue to seek exposure to the quality end of the office sector and Asian investors in particular are stepping up their presence,” Butler says.
“Deals for a number of major office properties in Sydney and Melbourne have recently closed or are going through due diligence and the bulk of these involve a foreign buyer. Offshore groups are stealing the march on most domestic super funds and wholesale funds, which with a few exceptions have been inactive in recent months and are unlikely to enter the market until mid-2012.”
The only exceptions to the positive outlook for Asia were Hong Kong and India, where the mood soured further during September, with investors becoming more risk-averse and demanding further discounts on property asking prices.