This article is from the Australian Property Journal archive
COMMERCIAL real estate investment approvals by the Foreign Investment Review Board were nearly slashed in half to $38.8 billion during 2019/20, but the figure was mostly in line with the years leading up to the record-setting year of 2018/19.
The number of investment approvals dropped from 487 to 440 over the year as investment value fell from $73 billion.
The preceding years saw 465 approvals in 2016/17 worth $43.7 billion, and 391 approvals during the following year worth $39.5 billion.
Canada moved from the second-largest source country for approved investment to the fourth-largest due to a decline of nearly $10 billion in the real estate sector.
Commercial real estate was the second-largest sector by value, although well behind the first-placed services sector which remained the largest with $73.6 billion of investment (down $2.4 billion).
Commercial real estate made up 20% of the total share of approvals in 2019/2020, and just $70 of the total of $55.823 billion approved for all real estate.
The number of approvals of proposed investment in developed commercial real estate increased from 221 to 247, while the total value decreased from $58.3 billion to $28.2 billion. FIRB’s annual report stated the rise in the number of applications despite the fall in value can in part be explained by the introduction of the zero dollar threshold changes on 29th March 2020, which led to applications for a variety of low-value small business premises that would previously have been below the pre-existing monetary thresholds.
This was compared to 2016/17’s 249 approvals worth $32.1 billion and the next year’s 191 approvals worth $25.4 billion.
Approvals for development totalled 193, worth $10.6 billion, down on both accounts over the year from 266 worth $14.7 billion.
The United States was the source of $13.1 billion of all real estate approvals, down from $19.6 billion. It was followed by Singapore with $9.54 billion (down slightly), while China increased from $6.1 billion to $7.11 billion, as did Germany, from $1.06 billion to $3.686 billion, and while Canada was next at $3.3 billion, it fell from $13.3 billion. This was a major reason for the country dropping from second to fourth on the overall table.
Hong Kong and France both accounted for about $2.4 billion, but Hong Kong dropped from $9.3 billion while France lifted from $740 million.
Australia is forecast to be among the most attractive handful of nations for cross-border commercial real estate investment in 2021, as European investors looking for growth opportunities and diversification put their money down under in record numbers.
The European investment volume has been driven by Scape’s $2.1 billion acquisition of the Urbanest student housing portfolio, with Allianz, AXA and APG, while Allianz teamed up with Charter Hall for separate Aldi facility portfolio purchases totalling nearly $930 million, and also bought the Redefine student housing portfolio for $459 million.
Deka Immobilien bought office towers in Melbourne and Brisbane for a combined $844.9 million, while DWS Group and M&G Real Estate have also made major purchases.
Holding up the Asia Pacific region’s representation have been ESR and Singapore’s sovereign wealth fund GIC, which bought Blackstone’s Milestone Logistics portfolio in a record-breaking $3.8 billion purchase in April.
By state, New South Wales was home to the majority of commercial real estate approvals in 2019/20, with its 131 worth over $11 billion. Victoria saw 78 approvals worth $3.98 billion, and Queensland 68 worth $2.86 billion. Western Australia’s 29 were worth $700 million, while South Australia’s 24 came in at $1.63 billion.
