Foreign buyers pour $5.2b into office and retail

INTERNATIONAL investors are dominating the national office and retail property sector, with more than $5.2 billion of sales completed in the past year.

INTERNATIONAL investors are dominating the national office and retail property sector, with more than $5.2 billion of sales completed in the past year.

The deals are in defiance of the strong Australian dollar and reflect the country's stable workforce, rental conditions and high-grade assets being offered, according to the selling agents.

Australian real estate investment trusts are the main vendors as they look to raise capital for the spate of share buybacks and in the general course of "recycling" assets to freshen up the portfolio.

One of the latest assets being reviewed is the half-share of Mirvac's 60 Margaret Street, understood to have been put on the market by the MTAA Super fund.

Asia's LaSalle Investment Management is said to be among the investors looking at the stake in the $450 million property, which has 36 levels of office accommodation and three levels of retailing, known as the Met Centre.

Last year, about $5.23 billion flowed into Australia, a 21 per cent increase over 2010.

Asian investors are becoming increasingly active in Sydney's retail investment market, spending $231.9 million last year compared with $26.3 million in 2010, according to CBRE and Jones Lang LaSalle Research.

CBRE's latest MarketView report says the office investment market is expected to remain strong through this year, driven by foreign investors, unlisted funds and superannuation groups, with privates active at the lower end.

The senior manager for global research and consulting at CBRE, Luke Nixon, said it was expected Australian real estate investment trusts would continue to be net vendors of CBD office property until there was a significant rise in sharemarket valuations.

The five biggest office sales at or above the $200 million mark during the year included 259 George Street, Sydney, for $395 million to the Tay family of Singapore, Riverside Plaza, 452 Flinders Street, Melbourne, for $201 million to the DEXUS Property Wholesale Fund and half of the QV1 building, 250 George Street, Perth, for $310 million to Australian Reward Alliance.

Asian investors were prominent price-setters in the Sydney retail market, accounting for one in five transactions of more than $5 million last year.

According to Anthony Bray, the director of sales and investments at Jones Lang LaSalle, Australia is seen as a haven for foreign investors due to the transparency of the market, strong economic fundamentals and exclusive enclaves of prime retail shops, mainly in major CBD precincts.

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