Alistair Walsh | 18 November 2012

Commercial property sales up 17% in Australia as globally sales fall: JLL

Transaction volumes of commercial property in Australia in quarter three increased 17% from the same time in 2011, bucking the global dip of 6-7%, according to Jones Lang LaSalle research.

There have been $12.07 billion of commercial property sales to date for 2012 in Australia, compared with $12.09 billion for the entirety of 2011, according to Jones Lang LaSalle’s Global Capital Flows report for quarter three.

“That’s a solid result in light of the difficult business environment that has prevailed this year. We are operating in a more cautious global economic environment in 2012 compared with 2011,” says Jones Lang LaSalle’s John Talbot.

Foreign investment accounted for US$3.7 billion of transactions in Australia during the quarter – 16% of the total investment.

The report finds that US$2.3 billion of foreign investment was from inter-regional purchasers, including $1 billion in Sydney’s Barangaroo from the Canadian Pension Plan Investment Board.

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Sydney was the sixth most active market in the Asia-Pacific region for quarter three, with US$3.8 billion of sales. Tokyo had $9.9 billion, Hong Kong had US$6.7 billion and Seoul had US$6.5 billion.

Across the world, there was US$100 billion of direct investment in commercial real estate in the third quarter, down 6-7% from the same quarter last year, as well as when comparing the first nine months of this year to last.

In quarter three the Americas accounted for US$44 billion of investment and Europe, the Middle East and Africa (EMEA) accounted for US$33 billion.

“China remains very active, as does Hong Kong and Japan, and we see the strong REIT markets supporting further activity across the region. At the same time, large global sovereign and pension funds are returning their focus to Asia Pacific and we maintain our expectation for full year 2012 volumes in Asia Pacific to reach US$88 billion, compared with US$98 billion in 2011,” says Talbot.

Head of office investments in Australia for Jones Lang LaSalle Simon Storry says Australia followed global trends in quarter three.

“Investment activity was robust while leasing activity was subdued. The high transaction volumes reflect, in part, the weight of money seeking exposure to prime grade real estate assets,” Storry says.

“In Australia this trend is underlined by the high level of offshore interest. Over the first three quarters of 2012, offshore investors accounted for 34% of all transactions.  This compares to 25% for the full year 2011. There is no sign that this inflow will diminish as we move into 2013,” says Storry.

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