This article is from the Australian Property Journal archive
AFTER a record year of capital flows in 2021, commercial property transaction activity has tempered over the first half of the 2022 calendar year.
According to CBRE’s latest Australia In & Out report, there has been approximately $15.2 billion in transactions across the industrial, office, retail and hotel sectors this year, compared to $23.8 billion in the same period last year.
“The decline in the overall sales volume in the first half is not a reflection of the market or investor interest. We saw significant trading in 2021 so it’s natural to expect market activity to decline year on year,” said Mark Coster, head of capital markets, CBRE, Pacific.
Office assets were the star performer over H1 2022, with around $6.3 billion changing hands, while retail followed with circa $4.7 billion, topping the previous corresponding period by 11%.
“We continue to see strong investor interest, albeit at pricing reflective of the changing dynamics in the market around rental growth, differing risks across the asset classes and the cost of debt, which has moved upwards over the past quarter,” added Coster.
On the other hand, a major shift between the two years was the dropping off of industrial and logistics portfolio transactions, which fell to $3.5 billion from $10.6 billion in H1 2021.
A single record breaking deal in the first half of 2021 eclipsed the entire period of transactions this year, with ESR Australia’s $3.8 billion acquisition of Blackstone’s Milestone logistics property portfolio.
The volume of offshore investment was also down over the period, with 26% accounted for compared to 35% in the previous year.
“Hong Kong investors have led investment activity, accounting for circa $1.3 billion in acquisitions in 2022. Investors from Hong Kong appear to be diversifying their portfolios with Australia being a key destination,” said Tom Broderick, Australian head of capital market research at CBRE.
For Hong Kong this is a $641 million increase in capital flow into the country compared to the previous year, while Singapore saw a $3.25 billion decline and the US was down $902 million.
“In fact, since 2020, Australia has been the 2nd most popular destination globally, behind only Mainland China, for Hong Kong outbound capital investing in commercial real estate.”
Singapore followed in offshore investment into Australia with $1.2 billion, the US with $500 million, Germany with $460 million and Korea with $320 million.
Capital outflows from Australia more than doubled over the period, compared to H1 2021, hitting $2.1 billion, thanks in large part to reopened international borders.
Outflows were pretty evenly split across the Asia Pacific, the Americas and EMEA, though by country the US saw the most investment with just over $700 million deployed, followed by Singapore and then the UK.
