Overseas investors dominate commercial property purchases: Savills

Foreign investors made up the largest group of buyers of commercial property around Australia in the year to September, and they are expected to increase their share as global instability increases, research by Savills says.

It found that overseas buyers dominated overall acquisitions in the past year, spending 38 per cent of the $30.6 billion in commercial transactions, followed by funds with 18 per cent, trusts 16 per cent, and private investors 13 per cent.

Offices were the asset class of choice for overseas buyers, who accounted for almost half of the $16.4 billion in sales nationally. They also made up 30 per cent of retail sales and nearly 25 per cent of industrial sales nationally.

Savills chief executive, Australia & New Zealand, Paul Craig, said investors, particularly from China, were becoming increasingly attracted to Australia’s stable economic and political system.

“Australia’s safe haven status will move into even greater focus in the coming 12 months as international markets struggle with political and economic issues – Brexit, a change of government in the US and elections in Germany and France – creating uncertainty in the minds of investors,” he said.

“Uncertainty is not a friend of investors and Australia’s stable economic and political climate will, perhaps more than ever, drive a very high inflow of overseas capital. Globally we are still considered cheap and we strongly believe those inflows from abroad, in particular from Asia and the Middle East, will grow again in 2017,’’ Mr Craig said.

However, a lack of stock availability could put a significant dampener on transactions, according to Savills national head of research Tony Crabb.

“So it’s really a matter of supply. Will owners want to sell? What will they buy instead?  Will new construction be enough to meet any supply shortfall? What we do know is that while demand may outstrip supply we are in for another 12 months of very strong investment,’’ Mr Crabb said.

According to Savills, the $16.4 billion in office sales in the 12 months to September was down 14 per cent from $18.9 billion in the previous year, but this was still higher than the five year average of $13.9 billion.

Industrial sales, at $5.6 billion, were down from $6.33 billion, but also higher than the five year average of $4.5 billion.

Retail sales, at $8.6 billion, were also lower than in the previous year, yet higher than the five-year average of $6.9 billion.