Australia achieves record $17.3b in cross border investment

Australia achieves record $17.3b in cross border investment

28 June 2019

Cross-border investment in Australia’s commercial property market is at the highest-ever level, having reached a record $17.3 billion during 2018 and $4.1 billion so far in 2019, according to Knight Frank’s latest research.

The research found investors from the US and Canada were the most active in Australia during 2018, but Asian investors have led the away this year so far.

Knight Frank’s Active Capital report reveals that globally, a long-term lowering of GDP growth and interest rates in a late-cycle economic environment is encouraging an increase in cross-border capital flows, both to diversify risk and chase enhanced returns.

Of almost $1 trillion spent on commercial real estate globally over the past 12 months, one third involved cross-border investment, with Canada, the US, Mainland China and Singapore home to the leading cross-border buyers over this period.

Knight Frank Partner and Head of Research and Consulting Ben Burston said the share of cross border investment in Australia is well above the global average, reflecting the strength of global demand.

“Australia saw record investment volumes in commercial property in Australia in 2018, reaching a total of $43 billion,” he said.

“Offshore investors are a key driver of demand, accounting for 40% of total sales volumes in 2018, and 38% so far in 2019, up from 35% in 2017. Globally, around one third of investment is cross-border, so Australia is one of the markets where cross-border capital is most prevalent.”

A rise in investment from the US and Canada underpinned the increase in cross-border activity during 2018 in Australia, buoyed by Oxford Properties acquisition of the Investa Property Fund.

Knight Frank Joint Head of Institutional Sales Paul Roberts said despite a slowdown in the economy in Australia, commercial property investors were still very active.

“Subdued economic growth in recent months has not dampened demand for well-let office assets across the country,” he said.

“Sydney and Melbourne continue to see strong interest, and we now see more investors looking for opportunities in Brisbane and Perth as leasing fundamentals improve in those markets.”