Asia-based investors eye Canberra

Colliers International meets hundreds of investors across Asia.

Australia continues to see capital flow from offshore groups with significant investment from Asia. Although much of foreign investment has been focussed in Sydney and Melbourne, Canberra is seeing more interest from these groups. Colliers International expects to see several new entrants in Canberra over the next 12 months.

Matthew Winter, Investment Services Executive at Colliers International recently travelled to Singapore, Hong Kong, Shenzhen and Guangzhou and met hundreds of investors looking to enter the Australian property market for the first time.

“Countries such as Canada and Australia are viewed as markets which offer stable economic conditions and investors are keen to learn more about Australia’s capital city, Canberra.

“Over the past six months there’s been an increase in enquiry to secure Canberra assets by foreign investors, however many large investors are sitting back and watching the property market before making their move.

“Asia-based investors understand the relative value of Canberra assets with long-term government tenants, which was seen with the Louisa Lawson building sale late last year for $225 million to South Korean property investor, FG Asset Management. The building was sold with a cap rate of 5.8 per cent which is a much better return compared to what many Asian investors are getting in their own countries.

“For example Japan currently has negative interest rates and a bond yield of -0.2 per cent, so it makes sense to invest their money in Australian property where they can get six to seven per cent returns on long term investments,” said Matthew.

According to Colliers International, one of the obstacles of securing foreign investment in Canberra is the scale of property, which is often significantly smaller than what investors are after. Many wealthy private investors and syndicates in Asia are looking to spend in excess of $100 to $150 million to build large scale precincts or acquire large core-plus assets.

Asian city skylines are filled with apartment towers as developers try to achieve the maximum yield of units on the sites. Often these developments are built quickly and the quality of the developments vary.

In Shenzhen, single developers are known for constructing 15 to 20 towers on one site, more than 40-storeys high per tower and the design of the towers are identical.

In Singapore, the landscape looks significantly different to many other Asian cities. Singapore has a mix of heritage and new buildings, however they have a lot of planning controls in place to encourage the development of green buildings and green living. Many developments are of high quality and designed to be environmentally friendly.

Matthew said that more than 100 investors gathered in Singapore to hear from Colliers International about the Australian property market on his recent trip.

“Unlike in Hong Kong and China where majority of investors are wealthy privates and developers, Singapore has more Institutions and REITs looking to invest in Australia.

“With Canberra Airport offering direct flights from Canberra to Singapore later this year, it will make it even easier for investors to visit Canberra and see the potential assets and sites for sale,” said Matthew.

Colliers International has showcased 97 properties across nine Asian cities in the past three years, meeting with Asia-based investment groups which has resulted in more than $1 billion in property transactions.


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