Foreign Investor Appetite To Drive Melbourne Growth: CBRE

Australia’s commercial property sector will remain popular with foreign investors as Asian buyers increasingly looking to mature markets, attendees at CBRE’s annual Market Outlook breakfast in Melbourne were told this week.

The event included presentations from CBRE’s Asia Pacific Head of Research, Dr Henry Chin, CBRE’s Australian Head of Research Stephen McNabb and a panel of CBRE experts.

Citing results from the company's Asia Pacific Investor Intentions Survey 2015, Dr Chin said the percentage of regional investors planning to make real estate purchases this year had dipped from 64% in 2014 to 54% in 2015 and there had been a shift in the assets they were looking for.

“Investors have switched their focus from secondary assets in 2014 to prime core assets, with 43% of investors showing a preference for this type of asset,” Dr Chin said.

“The prime core market continues to dominate in the Asia Pacific region, with slightly reduced investment confidence and lower risk tolerance driving up appetite levels for more stable investment options.”

The office market continues to dominate as the sector of choice amongst investors, with 32% of survey respondents showing a preference to invest their capital in this area of the market. The industrial logistics market emerged as the second most sought after sector at 22%, followed by the hotel market with 12% showing an interest to invest in this asset class.

Dr Chin said there was also strong interest from investors to inject capital into alternative sectors of the market, with real estate debt in Australia and China emerging as the most preferred sector. Healthcare and retirement living assets are also set to rise on the radar of investors, with 21% and 19% of respondents showing an interest in these sectors respectively.

While Australia will continue to compete with the larger markets of the Americas and EMEA for Asian outbound investment, it attracted US$5.2 billion of investment in 2014 - the third largest share globally and a 33% increase year on year.

Dr Chin said the survey also showed Korean investors had surpassed Chinese buyers as the most active investors.

“These buyers are increasingly looking to diversify their property portfolios with assets in major gateway cities,” Dr Chin said.