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15-10-2015, 10:32 AM
Wave of Asian investment floods property market
Samantha Hutchinson
[Image: sam_hutchinson.png]
Property Writer
[Image: 300060-abf59542-723c-11e5-8a80-5a407624b6b3.jpg]
More than 30 per cent of Sydney’s office property by value is now owned by foreigner investors.Source: Supplied
[b]Australia is attracting almost twice the amount of Asian investment as Europe, with a mounting wave of Singaporean interest boosting inflows to $22 billion.[/b]
Data compiled by property agency Knight Frank has revealed Australia is now the third-biggest region for Asian investment, behind the US and Britain.
Asian investors tipped more than $22bn into Australian core property in the past two years, compared to Europe’s total of just above $12.2bn.
Singapore displayed the biggest appetite for Australian property, spending about $9.5bn, followed by Chinese investors ($8.7bn) and then Malaysia, Hong Kong, South Korea and down to Japan, which invested $3.3bn.
Agents are bullish on the outlook, arguing that investment from other parts of Asia is growing even as China is experiencing slower growth and more testing economic conditions.
“Regardless of whether Chinese investment eventually cools, there is significant potential for increased capital to flow into Australia from places such as Japan, Taiwan and also the US given the lower Australian dollar,” Knight Frank institutional sales head James Parry said.
“Quality institutional assets will continue to hold a place for offshore capital investment.”
The investment thesis for local property is clear, with Melbourne and Sydney still ranked within the top 10 cities globally for core office yields, with deals in both cities transacting on yields between 5.85 per cent and 5.71 per cent, compared with 3.5 per cent in London and Paris, and 2.9 per cent in Hong Kong.
Investors had shown an increasing willingness to take on more risk to achieve a higher yield, Mr Parry said, and were showing an openness to compromise either by taking on more risk than they originally planned, or considering alternate locations to what they originally intended.
“Two or three years ago, offshore investors were focused primarily on the Sydney and Melbourne office markets but increasingly, as prices go up and quality stock remains low in these cities, appetite is expanding to other major cities such as Brisbane, Perth, Canberra and Adelaide,” he said. “We are also seeing a trend of selling suburban assets to offshore buyers, who would previously have only been interested in CBD assets.”
The proportion of offshore ownership in Australian property has grown considerably in the past five years, according to research director Matt Whitby. More than 30 per cent of Sydney’s office property by value is now owned by foreigner investors.
- THE AUSTRALIAN
- OCTOBER 15, 2015 11:00AM
Samantha Hutchinson
[Image: sam_hutchinson.png]
Property Writer
[Image: 300060-abf59542-723c-11e5-8a80-5a407624b6b3.jpg]
More than 30 per cent of Sydney’s office property by value is now owned by foreigner investors.Source: Supplied
[b]Australia is attracting almost twice the amount of Asian investment as Europe, with a mounting wave of Singaporean interest boosting inflows to $22 billion.[/b]
Data compiled by property agency Knight Frank has revealed Australia is now the third-biggest region for Asian investment, behind the US and Britain.
Asian investors tipped more than $22bn into Australian core property in the past two years, compared to Europe’s total of just above $12.2bn.
Singapore displayed the biggest appetite for Australian property, spending about $9.5bn, followed by Chinese investors ($8.7bn) and then Malaysia, Hong Kong, South Korea and down to Japan, which invested $3.3bn.
Agents are bullish on the outlook, arguing that investment from other parts of Asia is growing even as China is experiencing slower growth and more testing economic conditions.
“Regardless of whether Chinese investment eventually cools, there is significant potential for increased capital to flow into Australia from places such as Japan, Taiwan and also the US given the lower Australian dollar,” Knight Frank institutional sales head James Parry said.
“Quality institutional assets will continue to hold a place for offshore capital investment.”
The investment thesis for local property is clear, with Melbourne and Sydney still ranked within the top 10 cities globally for core office yields, with deals in both cities transacting on yields between 5.85 per cent and 5.71 per cent, compared with 3.5 per cent in London and Paris, and 2.9 per cent in Hong Kong.
Investors had shown an increasing willingness to take on more risk to achieve a higher yield, Mr Parry said, and were showing an openness to compromise either by taking on more risk than they originally planned, or considering alternate locations to what they originally intended.
“Two or three years ago, offshore investors were focused primarily on the Sydney and Melbourne office markets but increasingly, as prices go up and quality stock remains low in these cities, appetite is expanding to other major cities such as Brisbane, Perth, Canberra and Adelaide,” he said. “We are also seeing a trend of selling suburban assets to offshore buyers, who would previously have only been interested in CBD assets.”
The proportion of offshore ownership in Australian property has grown considerably in the past five years, according to research director Matt Whitby. More than 30 per cent of Sydney’s office property by value is now owned by foreigner investors.