Foreign investors aren’t shying away from Australian real estate

Australian commercial property market_ by Global Capital Commercial

Foreign investment into the Australian commercial property market doesn’t look like it’ll be slowing down following results from a recent study. The survey from the ANZ/Property Council has shown foreign real estate investments are still strong in the commercial sector, with many respondents anticipating foreign investors to buy up hotels and other property.

Survey results shows strong foreign investment

Of the 1,100 surveyed, respondents expected nearly 20% of office purchases would be by foreign investors, and nearly 22% would be hotels bought by foreigners. This was actually a rise, although small, on the same survey carried out last quarter. This is despite the 60% fall in Chinese foreign investment which saw a $2.83 billion drop last year, according to data from real estate firm Cushman & Wakefield.

Chinese investment not slowing down

In fact, data from analyst company JLL said it believes the demand from Chinese investment won’t slow down even with the country putting in place restrictions on outbound capital. For Chinese investors, Australia is still in the top three destinations for offshore investors, alongside the UK and the US, the firm said. Although Chinese investment probably won’t slow down too dramatically, JLL believes some Chinese might be looking to sell off their overseas assets – including those in Australia.

Singaporeans the biggest foreign investors

However, the Singaporeans are actually investing more heavily into Australia than the Chinese, buying up US$2.475 billion in property in Australia, compared to China’s US$1.37 billion last year. Hong Kong is also a major overseas investor, with its residents spending US$944 million on Australian property. Foreign investment into Australian property makes up a big slice of the real estate market with 36% of all commercial property deals involving a foreign investor last year.

Japanese could become a strong foreign player

Japanese investor spending in the Australian commercial property is on the rise, with more than A$1.6 billion invested into the market last year. JLL said its analysis shows Japan might become more of a dominant property player in the coming years as investors look overseas to diversify their property portfolios.

Overall property view remains positive

The overall view from the ANZ/Property Council survey, however, was that the property outlook is looking positive although in New South Wales confidence wasn’t as strong. As laws about foreign investment change in both Australia and China, as well as in other countries, the investment could ebb and flow but the overall foreign investment market in commercial property in Australia is looking strong.