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The sector can expect a surge in cross-border capital investment throughout the year even as global macroeconomic headwinds continue, a report has forecast.
According to Knight Frank’s 2023 Wealth Report, 24 per cent of ultra-high-net-worth individuals (UHNWI) plan to directly invest in the Australasian commercial market, with only the middle east (25 per cent) attracting more interest.
Indirect investment into the Australasian commercial market, through a real estate investment trust (REIT) or debt funding for example, is on the cards for 18 per cent of global UHNWI. Therefore, it earmarks the region as the leading global market.
Antonia Haralambous, associate at Knight Frank, explained offices remain the largest target sector with over 40 per cent of UHNWIs declaring interest in the market sector, with the industrial and residential sector set for a 19 per cent share.
Along with office spaces in the United Kingdom, Germany, the United States of America, and the Netherlands, Australian office spaces will experience “robust demand.”
Additionally, health-related assets remained a target for a third of the report’s respondents, marking the second consecutive year the asset class has topped the wish list.”
In terms of investment sums, 54 per cent of respondents plan on investing under US$1 million, while one in 10 will invest US$20 million or more. According to the report, “knowing what options are available at differing price points will be critical to success.”
The average size of Australian office deals ranges from US$3 million to US$15 million, and Knight Frank noted this investment would provide a “strata office investment in Sydney of 500 [to] 5,000 square feet within an office tower or a small suburban office building.”
Aside from office spaces, Australian farmland has also been indicated as a top commercial investment opportunity for UHNWIs, as the Australian government has indicated intentions to increase the value of its agricultural sector from $60 billion to $100 billion.
Andrew Blake, Knight Frank’s head of regional capital and agribusiness in Australia, explained, “This requires improvement of landscape functions, provision of livestock with high welfare standards, maintaining a powerful social licence, and a biodiversity program.”
He added that the nation “has a unique opportunity to leverage its location, efficient logistics network, and agtech to collaborate and make its agriculture industry a leader in the global market.”
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