AUSTRALIAN super funds and listed property trusts are expected to start migrating cash to offshore markets in the coming year as managers seek higher-yielding investments.
But the outflow will be more targeted than in previous years and more likely to involve a joint venture partner, according to LaSalle Investment Management.
The regional head of research and strategy, Asia Pacific, at LaSalle Investment Management, Paul Guest said demand for core opportunities had not diminished over the past few years and it was only projected to grow as Asian pension, insurance and sovereign wealth funds expand their allocations to real estate.
LaSalle has about $US2 billion of office, retail, residential and hotel assets under management in Australia, with its two biggest being the Novotel Melbourne on Collins and Australia on Collins, valued at $204 million, 179 Elizabeth Street, and the Sofitel Wentworth hotel, Sydney.
"For certain investors the entry price is worthwhile given the quality of the income stream," Mr Guest said.
"This demand can also make value-add strategies attractive, by restoring quality income streams through active asset management."
Mr Guest said the weight of money in the country from superannuation funds was expected to force investors to look overseas.
He said he doubted it would be the same as the last boom when trusts all went offshore with mixed results, but said the low-interest-rate environment in Australia would force some funds to seek alternative, higher-yielding investments.
"I expect there to be more joint ventures undertaken with overseas investors, such as Goodman Group, for example, has done in Asia," Mr Guest said.
The associate director of research and strategy at LaSalle Investment Management, Alexandra Gray, said the changes in superannuation contributions would see more cash flow into the property sector.
Ms Gray added that the big Asian and US investment funds would increase competition in the region as they also chased higher-yielding assets.
She said in Australia, the best opportunities were in the repositioning of grade B offices in CBDs.