A new survey has found that Australia is the second most attractive country in the Asia-Pacific for cross-border real estate investment.
CBRE’s inaugural Asia Pacific Investor Intentions Survey has found that Australia is host to the second most attractive property market for cross-border investors in the region after China.
According to Stephen McNabb, CBRE’s Australian Head of Research, these findings are consonant with the consultancy’s take on market conditions at present.
“Not inconsistent with our current read on the market, the results show that Australia still ranks highly in terms of cross border investment attractiveness,” McNabb said.
“Australia ranks No. 2 (identified by 18 per cent of cross border investors) after China (28 per cent) as the most attractive country for property investment, with Sydney and Melbourne ranking 3rd and 4th respectively in relation to city investor preference, after Tokyo and Shanghai.”
According to Michael Andrew, CBRE Senior Director, International Investments, demand from foreign investors also shows signs of expanding to secondary markets beyond the downtown areas of Australia’s leading cities, due to improving fundamentals.
“We have seen the emergence of an appetite for assets in what has often been seen as secondary ‘non-core’ markets, where investors understand they can still get high quality assets, strong covenants and at better yields than in the CBD,” Andrew said.
The survey also uncovered a marked shift in investor preferences towards industrial and logistics assets, which have gained in popularity relative to the office sector.
In terms of which sectors in the Asia Pacific appeal most to property investors, the office sector remains the top choice at 32 per cent, with industrial and logistics in second place at 29 per cent, and residential third at 21 per cent.
Despite the popularity of Australian property amongst Asian investors as evinced by the CBRE survey, McNabb warns that foreign capital inflows this year could slacken, during to the rising appeal of rival markets such as China, as well as other growth hotspots around a globe.
“We expect a slowing, not an exodus, in capital inflows,” said McNabb. “This is consistent with our view that demand for AUD assets falls relative to improving growth stories globally, the outcome of which has been reflected in a lower AUD over the past six months or so.”