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Foreign investment breaks commercial real estate records

By Grace Ormsby
06 January 2022 | 1 minute read

Foreign investment in Australia’s commercial property sector hit a new high in 2021.

Data released by CBRE back in December showed that more than $16.6 billion in office, retail, industrial and hotel assets had been transacted over the calendar year – and there was still over two weeks left in the year.

It’s a new annual record, according to the commercial giant, with CBRE associate director Tom Broderick highlighting how “despite international border closures, foreign investment in 2021 has outstripped the previous record total of $15.5 billion achieved in 2015”.

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He outlined: “Early in the pandemic, the conventional wisdom was that foreign investment would slow due to closed borders and an inability to inspect assets. However, about 66 per cent of the foreign capital deployed in 2021 has been in partnership with a local fund manager, which has bolstered purchaser activity.”

According to Mr Broderick, the charge has been led by North American investors, who accounted for just under 40 per cent of all foreign investment for 2021.

It’s a step up from the circa 26 per cent share of foreign investment North Americans had held in the Australian market for the five years leading up to the pandemic.

Singaporeans were the second-most active purchasing group across the 12-month period, accounting for 35 per cent of 2021 foreign activity, which CBRE said was also up on the pre-pandemic average.

CBRE Pacific head of capital markets Mark Coster seconded the idea that the level of foreign activity undertaken was far higher than expected.

“What surprised us was how quickly the industry innovated in regard to acquiring assets during this year’s lockdowns and how overseas capital found a way to compete for available properties, including teaming with local investment partners,” he said.

The momentum from the record-breaking year is expected to continue into 2022, with Mr Coster indicating that international capital “is expected to play a continued strong role in the commercial property investment market next year”.

He explained that Australia is being viewed “as an attractive proposition given the available returns and the relative strength of the economy compared to some parts of Asia, North America, and Europe”.

While foreign investment was most dominant in the industrial and logistics (44 per cent) asset class in 2021, followed by office (43 per cent), Mr Coster is foreshadowing a resurgence of retail in 2022.

According to him, “the amount of international capital assessing retail assets has increased significantly during 2021.

“We’re also fielding considerable interest in alternative asset classes such as life sciences and data centres.” 

Foreign investment breaks commercial real estate records
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ABOUT THE AUTHOR


Grace Ormsby

Grace Ormsby

Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.

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