Foreign investors step up as deal flow rises

In the Australian and New Zealand markets, offshore investors accounted for 41 per cent of the $20.8 billion in office, retail, industrial and hotel property transactions that were finalised in the 2021 first half, according to CBRE’s In and Out report. That tally compares to a 35 per cent share in last year’s first half.

Australia dominated the overall tally, accounting for $19.6 billion of the first half sales, up significantly on the $10.8 billion in sales recorded over the comparative period in 2020.

The proportion of offshore buyer activity in the Australian market alone was higher at 43 per cent, up from 37 per cent for the previous corresponding half.

“Given the significant impacts brought about by the pandemic, many investors were cautious, resulting in reduced transaction volumes across most sectors in H1 last year,” report author Tom Broderick said.

“In 2021, sales volumes have doubled, with the relative strength of the COVID-19 response in Australia and New Zealand giving investors confidence to return to the market.

“Both countries’ economies have also rebounded strongly compared with other developed nations across the world, with GDP and the labour market above pre-pandemic levels.”

Singaporean investors led the charge, accounting for $4.276 billion of the transaction activity overall and $4.110 billion of the deal flow in Australia. In second place were US investors, who booked in $1.442 billion of Pacific deals, most of that in Australia.

Driven by the rising demand from e-commerce players for warehouse space, the industrial and logistics sector was the most sought after commercial investment sector in Australia. Offshore buyers snapped up $5.4 billion in industrial assets over the first half.

Among the headline industrial deals in the first half was the record-breaking $3.8 billion selldown of the Milestone Logistics portfolio accumulated by Blackstone to ESR and its backer on the transaction, Singapore’s GIC.