Chinese capital continues to buoy Australian property value

Chinese investors remain active in deploying capital offshore into the Australian market, targeting residential development sites and/or income-producing assets that are capable of being converted to residential, says one international real estate group. 

CBRE says offshore capital flows continue to strengthen the Australian market, buoyed by new and increasing mandates from existing investors as well as from less popular markets such as Japan.

CBRE institutional and international investments NSW director Michael Andrews said office assets in the core Sydney and Melbourne CBD markets remain sought after, but there is an emerging shift in sentiment towards emerging secondary markets in these locations.

“There is a very strong appetite from global capital for quality office investments,” Mr Andrews said.

“The change we are seeing, however, is in their growing acceptance of markets outside of the CBD core, such as North Sydney, Parramatta and Macquarie Park in New South Wales, and St Kilda Road in Melbourne." 

Mr Andrews said Asian investors are seeking out assets in more diverse markets, with greater demand emerging for more niche opportunities.

“The shift towards counter-cyclical investment is gaining some momentum, with Asian investors showing more willingness to invest in secondary locations in addition to alternative sectors outside of the traditional office assets, such as student housing and healthcare.”

For the second consecutive year, CBRE figures reveal that the US remained the favoured destination for Asian capital, drawing 43 per cent of the overall total, followed by EMEA (Europe, Middle East and Africa) as the second-favored at 27 per cent.

The Pacific attracted 7 per cent, or $4.4 billion, of the overall investment turnover, with 53 per cent of this injected into the Sydney market.

New York surpassed London as the top metropolitan destination for outbound investment in 2016. However, it contributed to a smaller share compared to 2015.

The top five destinations – New York, London, Hong Kong, Seoul and Sydney – contributed to 37 per cent of the overall total, a decrease from 42 per cent year-on-year.

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