Australian commercial property markets account for approximately 45% of all real estate investment in the Asia Pacific region, followed by Japan and China.
According to Jones Lang LaSalle, the appeal of Australia to investors lies in the country’s transparent markets, robust regulatory regimes backed by solid economic principles and comparatively high yields.
Since 2007, a trend has been observed that offshore buyers of commercial property are approximately four times greater in number than those selling their investments. This trend is now becoming even more significant.
David Rees, head of research and consulting at Jones Lang LaSalle, said “Australia punches well above its weight in terms of direct investment. Last year 29% of investment came from offshore – an all-time record.”
Offshore investors tend to be drawn to the Asia Pacific region because of its prospects for growth in the long term.
It is anticipated that, in 2013, capital flows into Australia will continue. However, premium assets are sought after by offshore investors but are scarce. This will probably result in yields being compressed by around 25 basis points at the tight end of the market.
According to Rees, the preference for commercial real estate in Australia is symptomatic of a re-weighting to real estate observed throughout the world, as global investors alter the weighting of their portfolios from large equity and bond markets to real estate markets that are smaller in size.