Asian buyers' $1 billion war chest
Recently, Bright Ruby, a Singapore-based Chinese investment group, spent more than $260 million buying two properties in Sydney. The group is said to be looking at spending up to $500 million on office towers across the country, including in Melbourne.
China's HNA Group has also entered the market with the purchase of a Sydney property for $117.7 million. It is also believed to have a large amount of cash destined for the office market.
The new wave of Asian, and in particular Chinese, investors follows in the footsteps of companies such as Ipoh, Government of Singapore Investment Corporation, China Investment Corp and the Keppel Group's K-REIT.
These groups own big office and retail assets across the country.
At the NSW Property Council's Asian investment forum in Sydney on Friday, panellists said the amount of money coming to Australia from Asia was immense.
Duncan Calder, a KPMG partner in Western Australia, told the forum the Asian interest had "huge potential for Australia".
"For every $2 in China that's invested here, there is about $20 from Britain and America," he said. "But sometimes Australia can be too arrogant and too confident. The lines of communication need to be better to attract that Asian money."
Mr Calder said now was the time for Australian companies and investors to start talking to their Chinese clients because building relationships took time.
The president and chief executive of CBRE in Australia and New Zealand, Tom Southern, said competition for property was rising among local super funds, real estate investment trusts and new Asian investors.
"What we need from Asia is occupiers of the offices as much as the capital," Mr Southern said.
"But what the Chinese are willing to do is invest in development. Our banks have become derelict in their duty to fund our development sector. That's where the Chinese have come to provide the capital as they understand development risk."
Frequently Asked Questions about this Article…
According to the article, Asian investors have mandates with agents to buy more than $1 billion worth of Australian commercial property, including office space, shopping centres and industrial warehouses.
The article names several active buyers: Bright Ruby (a Singapore-based Chinese investment group) which spent more than $260 million on two Sydney properties and is looking at up to $500 million for office towers, China's HNA Group which bought a Sydney property for $117.7 million, and earlier investors such as Ipoh, the Government of Singapore Investment Corporation (GIC), China Investment Corporation (CIC) and Keppel Group’s K-REIT.
Asian investors are targeting a range of commercial assets across Australia: office buildings and office towers, shopping centres (retail), and industrial warehouses. The article also notes Chinese groups are willing to invest in development projects.
Panelists in the article say competition for property is rising: local super funds and real estate investment trusts (REITs) are now competing with new Asian investors for the same assets, increasing demand for office, retail and industrial properties.
The article quotes CBRE’s Tom Southern saying Chinese investors are willing to invest in development because Australian banks have become 'derelict' in funding the development sector, and Chinese groups understand and are prepared to take on development risk.
Duncan Calder of KPMG suggests Australian companies and investors need to improve lines of communication and start building relationships with Chinese clients now, because establishing trust and business relationships takes time.
The article quotes Duncan Calder saying that 'for every $2 in China that's invested here, there is about $20 from Britain and America,' indicating that while Chinese investment is growing and 'immense', historically British and American capital has been larger.
Based on the article, everyday investors could face a market with stronger competition for commercial property assets as Asian groups bring significant capital; there may also be more development funding available from Chinese investors, and a potential shift in demand dynamics for office, retail and industrial property.
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