Australian property investment across the office, retail and industrial sectors reached a new record in the 2015/16 year.
Colliers International’s 2015/16 Capital Markets Investment Review series has found investment across these three key sectors reached $31.18billion, up 7.96% from the $28.88billion recorded in 2014/15.
The Capital Markets Investment Review is a series of three reports exploring fundamentals of current and future investment in the office, retail and industrial markets. Each report dissects transactional activity, outlines specific case studies and provides expert forecasts for the year ahead.
Total office investment sales volumes for 2015/16 ($15.91billion) came very close to equalling volumes recorded in 2014/15 ($16.16billion), with sales volumes in New South Wales leading the country at $8.15billion. Offshore buyers dominated transaction activity in the office sector in 2015/16, buying just under $9.4billion (59%) of office assets across the country.
The next development cycle is underway in particular in Sydney and Melbourne and, combined with strong population growth and infrastructure spending, will be a key driver of continued capital flowing into the Australian office investment market in the year ahead.
Australian retail continues to be a star performer on the global real estate investment stage, with the 2016/15 period achieving record levels of capital flows driven by both domestic and offshore investors. The $7.63billion invested in Australian retail assets across the country in 2015/16 represented another record year of transactional activity for the sector, up 1.19% on the prior financial year and ahead of the previous high of 2012/13 which saw $7.627billion recorded.
Against a backdrop of global political instability and deflationary threats, Australian retail property assets are becoming increasingly popular with foreign investors.
Following on from the tide of investment materialising in early 2014, almost $7.64billion in industrial sales occurred nationally over the 2015/16 financial year. Sales over the last two years have been more than twice the 10 year average of $3.7billion per annum. Offshore buyers have increased their footprint into the Australian industrial and logistics market. Enticed by the healthy returns and regulatory confidence in Australian assets, the offshore component of sales volume last year increased to 29% from 11% in 2014/15.
In an era of historically low interest rates and yields, the comparatively higher returns offered by Australian industrial and logistics assets continues to lure steady investment volumes. Investors from the Asia-Pacific region accounted for 66% of offshore investment.