Commercial Investment Activity In Line With Record 2013 Volumes

Research from JLL has revealed that Australian commercial investment activity is tracking in line with the record volumes achieved in 2013.

Preliminary figures for the first six months show $11.5 billion of sales were recorded (above $5m) across the office, retail and industrial sectors. This compares to the record $23.8 billion of sales recorded across all sectors in 2013.

Transaction volumes in 2014 were inflated by the inclusion of the DXS / CPPIB acquisition of the CPA portfolio.

The participation of CPPIB in corporate activity highlights the underlying demand for direct real estate in Australia from offshore investors.

The JLL figures show that transactions for the national office market are tracking considerably ahead of 2013 results. As at 25 June, JLL’s preliminary figures show $8.6 billion of sales for the first six months of 2014, compared to $13.1 billion of sales for the full year in 2013.

“Sydney has been the most active office market for the first six months of this year.  Last year we saw a lot of activity in Perth and Brisbane, but this year investors are focused on the Sydney market," JLL’s Head of Office Investments - Australia, Rob Sewell said.

“The large office transactions that have concluded and others which are in advanced stages of due diligence will result in new pricing benchmarks.  This has already occurred with the transaction of 275 Kent Street, Sydney.

“Core pricing in Australia’s office investment market has already moved in 2014, which will act as a catalyst for further product to be brought to market in the second half of the year.

“There remains large investors looking to deploy large amounts of capital into core products, which is expected to result in a busy second half of the year.

“We have seen strong activity from REITs on both sides of the ledger – by recycling capital and reworking their portfolios,” said Mr Sewell.

JLL’s preliminary figures show on a quarter-by-quarter basis, Q2 2014 volumes for all sectors (office, retail and industrial) were $7 billion, compared to volumes of $6.9 billion in Q2 2013.

“Offshore investment continues to remain strong in 2014.  Over the past four years we have seen offshore investment levels stable at around 25% of total transactions in the office, retail and industrial sectors combined and higher at 35% for the office sector,” concluded Mr Sewell.