Singapore Most Active Overseas Investor On Aussie Commercial Properties
AUSTRALIA – Compared to just 34 percent for the whole of 2019, data from JLL revealed that overseas entities were responsible for roughly 44 percent of the overall commercial property investments here so far this year, reported Commercial Real Estate on Wednesday (2 December).
Commercial properties, by JLL’s definition, consist of office, retail, and industrial assets.
“The most active offshore groups in 2020 have been from Singapore (A$2.28 billion), Germany (A$1.3 billion) and China (A$1.29 billion), said the property consultancy’s Capital Markets Head for Australia Fergal Harris, who added that these groups accounted for the majority of the offshore investment activity.
A testament to the continued demand for Australian commercial properties is the sale of a half-stake at the Grosvenor Place office building in Sydney to China’s sovereign wealth fund.
The acquirer, China Investment Corporation (CIC), is now seeking the approval of Australia’s Foreign Investment Review Board (FIRB) for the transaction, which is expected to be completed during the first quarter of 2021.
“JLL (brokered) the biggest office transaction for 2020, on behalf of Dexus, for a 50 percent interest in Grosvenor Place for A$925 million. This conditional exchange of contracts is a big vote of confidence from foreign investors in the Australian market and demonstrates the strength and attractiveness of our capital markets,” Harris noted.
However, commercial property sales across the country so far this year have fallen significantly to A$13.63 billion versus A$36 billion in 2019, when commercial transactions hit a record high. For December 2020, JLL expects around A$2 billion worth of commercial deals to be signed.
The property consultancy’s Research Head for Australia, Andrew Ballantyne, pointed out that the country’s excellent response to the virus outbreak has reassured offshore groups to continue investing here. He also noted that foreign investors sought “high-quality assets with strong covenants and long lease terms” this year.
“The response from policy makers in Australia has been unprecedented. This has provided downside protection to the Australian economy and a framework for an economic recovery in 2021,” said Ballantyne, adding that the country’s reputation has been strengthened by its stellar management of the COVID-19 pandemic.