Offshore buyers add major Perth development sites to their portfolios

Offshore buyers have increased their presence in WA’s property market with a series of big-ticket investments into the mixed-use development site sector.

In a year of strong demand, development sites in Perth’s metropolitan area valued at $510 million changed hands in the 12 months to June 30, with deals negotiated by Colliers International accounting for more than $200 million of the total sales.

Colliers International Director Investment Services Ian Mickle said despite being slightly lower than the $555 million recorded in the previous financial year, 2016 had been a buoyant year for development site sales and that offshore investors looking to secure new projects in WA had emerged as a significant buying force. 

“Offshore buyers, especially from Malaysia and Singapore, accounted for about 85 per cent of the mixed-use sites sold by Colliers in the past year,” Mr Mickle said.

“With soft conditions in their domestic markets, offshore buyers are looking for deal flow in more stable markets like Australia.

“The currency exchange is good and they are looking for a mixture of sites that will provide near-term starts as well as land banking opportunities.”

The financial year’s biggest development site deal was secured by a venture between Malaysian company AAIG and WA-based Fini Group who paid $85 million for sites two and three at Perth’s waterfront project Elizabeth Quay. 

In other deals earmarked for high-density residential developments, Singapore’s largest private developer Far East Organisation paid $70 million for the ocean front site at 3-7 Scarborough Beach Road while offshore company Resort Home Development Pty Ltd paid $15.4 million for the North Fremantle site at 35 Leighton Beach Boulevard. 

Singapore-based company Fragrance Group, which already has hotel and apartment projects in Perth, paid $23.8 million for the site at 36 St Georges Terrace.

Mr Mickle said Australian developers, while not out of the market, had adopted a more cautious approach and were looking for sites that had shorter development time frames. 

Apartment developers were behind most of the mixed-use sites purchased in the past year but the line-up of buyers also included hotel developers and aged care operators.

Although the pace of apartment sales in Perth has slowed considerably, the steady demand for well-located mixed-use sites with good levels of amenity and access to public transport is expected to continue into the 2016-2017 financial year.

“The appetite from overseas buyers remains robust and the recent Brexit and ensuing volatility will help drive more money to Australia’s stable market which is delivering good yield and high returns,” Mr Mickle said.

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