Australia is attracting a disproportionately high share of international real estate investment, according to a new report.
Property group CBRE said Australia has contributed five per cent of global property turnover in the past three years, despite representing just two per cent of global GDP.
This had been largely driven by foreign capital, with Australia attracting more cross-border investment than any other Asia-Pacific market between 2012 and 2014, according to CBRE.
Foreign buyers have been attracted by “stronger economic growth, perceptions of lower risk and the combination of higher interest rates and yields”.
CBRE said they have shown interest in both residential and commercial property, as well as infrastructure and government bonds.
Foreign investors have increased their balance sheet exposure to Australia by $18.8 billion over the past 7.5 years.
Australia attracted 12 per cent of Asian outbound capital in 2013, with a similar proportion of funds invested in the first half of this year, CBRE said.
Head of research Stephen McNabb forecast that Australia would continue to attract a disproportionate share of global real estate capital.
“On the whole, we are optimistic about a continuation of current trends over the next 12–18 months, although we acknowledge that Australia’s relative attractiveness will fade beyond that and that allocations are likely to normalise over time,” he said.
“An improvement in global economic growth and a return towards ‘normal’ interest rate settings, while appearing some way into the future, will be the likely catalyst.”