According to Colliers International, the clientele of Asian market investors buying in Australia has changed; Hong Kong and Singapore are rising above mainland China, with Macau emerging as a new, key source of capital.
Colliers International research found that inbound capital from Hong Kong and other markets like Macau made up 90% of Sydney’s transactions in 2018, compared to 23% in 2015. On the flip side, Chinese inbound capital accounted for 0% of Asian market transactions in Sydney in 2018, compared to 68% in 2015, illustrating a clear shift towards new key players.
“The Colliers International Asian Roadshow, which includes Hong Kong, Singapore and Kuala Lumper decided to include Macau for the first time in 2018; we recognised the different buyer mentality and the interest coming from this country,” said Steam Leung, National Director, Asian Markets at Colliers International.
This is evidenced by several recent sales which include the sale of 187 Thomas street in Haymarket, where the top 5 bidders hailed from Asian markets including Macau and Hong Kong and local Asian buyers. The building transacted for $145.8 million with a yield below 3%.
1 Dixon street in Haymarket, a multi-strata building with four tenants, transacted for just under $24 million - a - 5% yield and was sold to an Asian buyer.
Asian buyers also broke multiple records at 85 Liverpool Street in the Sydney CBD; the 78sqm shop with one parking space sold for $6 million dollars, a record breaking $76,000 per sqm and yield of 2.5%. The sale was led by Jordan Lee of Colliers International, Denis Wan off Apex Investment Alliance and Andy Hu of Knight Frank.
Colliers International, Director of Asian Markets, Jordan Lee said “Compared to other Asian markets, commercial real estate prices in the Sydney CBD are considered low compared to the high rate of return.”
“For example, an ordinary underground shop in the Sheung Wan area of Hong Kong is priced at HK$35 million, while the monthly rent is only HK$70,000 and the annual rental return is only 2.4%.”
“The Sydney CBD and Haymarket are the most popular choices for Asian buyers. Yields are much tighter than anywhere in the city, so these areas are very tightly held and when something comes to the market there is a lot of interest.”
Shops in Sydney have long been popular with Asian immigrants, and commercial real estate in CBD is especially hot, particularity as foreign investors are free to buy and sell, with no overseas stamp duty on commercial assets.
Steam Leung said “Major projects including the Light Rail, the nearly billion dollar revamp of Central Station and Darling Square Project have all brought huge pedestrian traffic to the Sydney CBD- particularly the World Square, Chinatown and Central Station areas, and continue to bring unparalleled appeal to the area for overseas buyers.”