Continued optimism in Aussie commercial real estate
The Australian real estate sector continues to go from strength to strength this year. Real estate had its strongest quarter in the last 12 months, with new deals commencing rising 25% above the March quarter.
The ANZ/Property Council Survey for the September 2018 quarter showed a key finding of ‘continued optimism in the commercial sector’. While outlooks remain largely positive, however, there has been ‘a significant decline across all markets on expectations around the availability of debt finance’.
A tightening of the credit belt will likely impact investor behaviour, although nowhere near as seriously as that following the global financial crisis nine years ago. According to the Australian, that’s because ‘gearing is lower, and more diversified than a decade ago, and institutional non-bank lenders are emerging’.
Contrary to the previous quarter, we saw increased CRE activity from onshore investors and less from the wider Asia Pacific region within Ansarada’s Data Rooms last quarter. While investment from Singapore halved in the June quarter, it remained strong at c.50% of total offshore interest.
Singapore remains a key player in the real estate market
In our last edition of Indicators, we looked at Singapore’s rising interest in Australian real estate, and in particular, the alternative asset classes that were garnering attention. Singapore Business Review reports that Singapore’s real estate investment to Australia has soared by 141% in over a year to US$3.5billion, according to data from Real Capital Analytics. Investments from the lion city have quadrupled since 2010, with ‘an annual compounded growth rate of 20%’.
Singapore’s sovereign wealth fund, GIC recently purchased a Brisbane office tower in May for over $100 million, the second major investment in the city in under 6 months.
This growing appetite from Singaporean investors has been a major factor in offsetting the loss of Chinese capital and evening out the total offshore contribution to the sector.
To learn more about trends in this space as they unfold, download our latest Indicators report here.