While overseas investment in Australia in the first half of 2022 declined overall, some countries remain key investors in our property market.
CBRE’s In and Out Report for the Asia Pacific region for the period found Hong Kong lead the investment charge with Singapore close behind and that South Korea and Malaysia had entered the market too.
Hong Kong investment totalled $1334 million, up $641 million on 2021’s first half.
CBRE research head Tom Broderick said Australia’s long-time appeal to Hong Kong investors had continued strongly.
“Since 2020, Australia has been the second most popular destination, behind only Mainland China, for Hong Kong outbound capital investing in commercial real estate,” Broderick said.
Investors in South Korea and Malaysia put money into Australian property during the period to the tune of $315 million and $66 million respectively after no significant investment during the first half of 2021.
German investment increased by $365 million to $463 million but Singapore, the US and Canada all decreased investment into Australia.
Singaporean investment was down by $3250 million to $1246 million, still enough for it to be the second largest foreign investor.
US investment decreased by $902 million to $496 million and Canadian decreased by $1103 million to $106 million.
Most of the decrease in volume was attributed to a larger than normal amount of portfolio deals in the first half of 2021, with the report saying that the 2022 figures so far were on par with pre-Covid figures from 2018 and 2019.
Broderick said Korean and Malaysian investors had long been involved in the Australian market but not as intensely.
“I think these countries are just not as active in the Australian market, so [it is] not uncommon for [there to be] no transactions during a six-month period,” he said.
Broderick said that most Korean investment was in the office sector and that there had been significant investment in the second half of 2021, including NPS purchasing the Melbourne Quarter.
Overseas investment in Australia, first half 2022
|Country||Volume (AUD million)||Change from 1st half of 2021 (AUD million)|
Source: CBRE's Australia's In & Out Report, H1, 2022
The office sector was also most favoured by Australian firms investing overseas with a $1.4 billion spend in the first half of 2022.
This was attributed to the borders opening post-Covid for many countries including Australia.
The US market was the most popular for Australian investors with around $700 million being invested into the office sector there.
The second largest was Singapore—the most significant deal in the first half of 2022 the partnership of Lendlease with Singtel to rebuild its Singaporean headquarters.
Australians also started investing in France and Vietnam, new markets for local investors.
Broderick said this was in response to supply chain concerns.
“The Vietnam investment is in the industrial and logistics sector,” Broderick said.
“It appears to be in response to the evolving manufacturing sector in that country, given the cheaper production costs and also companies looking to diversify their supply chains.”
The sames is true of the French investment by Australians.
“As a general trend, investors have been looking at that sector in many developed countries given the rise of e-commerce and strong industrial leasing demand during Covid,” Broderick said.
Australian investment in the industrial and logistics sector totalled around $760 million.
Total outbound investment was around $.2.1 billion.
Around $15.2 billion worth of assets in the industrial, hotel, office and retail sectors exchanged hands in the first half of 2022 compared to $23.8 billion in the same period in 2021.
CBRE Asia Pacific capital markets head Mark Coster said this was mostly due to a decrease in the amount of investment and exchange occurring in that sector which fell from $10.6 billion to $3.5 billion.
“The decline in the overall sales volume in the first half is not a reflection of the market or investor interest,” Coster said.
“We saw significant trading in 2021 so it’s natural to expect market activity to decline year-on-year.”