Offshore investors flock to Australian property: CBRE

SYDNEY, Sept 28 Wed Sep 28, 2011 2:11am EDT

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SYDNEY, Sept 28 (Reuters) - Foreign investors accounted for a third of commercial property transactions in Australia in the first nine months, the highest share in nearly two decades, with Asian investors stepping up their presence, data showed on Wednesday.

Offshore investors snapped up A$2.15 billion ($2.14 billion) of commercial real estate in Australia during the period, accounting for 33 percent of overall sales, the highest since 1994, property services firm CB Richard Ellis said on Wednesday.

"Of interest in the third quarter was the long-awaited emergence of Chinese investors into the direct Australian commercial property markets," Kevin Stanley, CBRE executive director, global research and consulting, said in a report.

And foreign participation is likely to have accelerated in the second half of the year, with data from property firm DTZ showing foreign investors accounted for 41 percent of transactions in July-Sept.

But overall sales activity in Australia dropped to A$2.5 billion in the third quarter from A$3.5 billion in the second quarter, a nearly 50 percent fall from a year earlier, DTZ said.

Property fundamentals remain healthy, but concerns about rising unemployment rate and a growth gap between booming resource sector and non-resource sector are likely to delay investors' decision making going forward, it added.

Australian employment unexpectedly fell in August while the jobless rate ticked up to a 10-month high.

Total investment volume amounted to about A$11.3 billion in the first 9 months, compared with A$16 billion in whole 2010, according to DTZ.

The property fundamentals in Australia remain good and investment from foreign investors buoyant, but it's unlikely that overall sales activity would pick up soon, DTZ said.

Sydney's office market drew strong interest from foreign buyers while some domestic players offloaded their non-core assets.

China's HNA Group this month bought an office tower in Sydney for A$117.7 million and Singapore's K-REIT Asia bought a 50 percent stake in an office building in Sydney. ($1 = 1.003 Australian Dollars) (Reporting by Eriko Amaha)

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