Last year, 742 recorded transactions in Australian commercial property brought in $34.1bn, with a third of that coming from deals closed between October and December, according to Cushman and Wakefield’s Australia Investment MarketBeat Q4 2017 report.
This was a 14% increase year-on-year from the 2016 result, and rivals the 2014 peak of $34.8bn. 2017 was also the fourth consecutive year that over $30bn was invested in Australia’s commercial property market.
The office sector continues to dominate investment, accounting for 50% ($17bn) of the total sales. Growth was led by Queensland, where total sales rose 68% year-on-year to $7.2bn. This contrasts with a 25% improvement in New South Wales and an 8% decline in Victoria.
Most of Queensland’s growth was accounted for by the office sector, where transactional volume nearly doubled to $3bn, though demand for office space was still strongest in NSW, with sales of $8bn.
Foreign investors remain drawn to Australia, with its relatively attractive yields. Overall, foreign investment reached $12.2bn in 2017, representing 36% of total investment. Singapore was the largest offshore investor, pumping $4.5bn into the market, followed by the PRC, at $1.5bn.
Domestic investment was also strong, rising 22% from 2016 to $22bn—a post GFC record.
“The outlook for 2018 remains positive with a number of assets that were offered to market in late-2017 yet to transact, which should help support investment volume in the first half of the year,” Cushman and Wakefield said.
“In addition, some landlords may chose to offer assets for sale to simultaneously take advantage of strong purchaser appetite and re-set their portfolios. While core assets will remain in demand, purchasers are likely to continue to search for higher returns and therefore further explore core-plus markets as well as alternative asset classes.”
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