Off-shore buyers are pouring hundreds of millions of dollars into indirect retail property investment, according to Savills Australia.
Major investors include the Abu Dhabi Investment Authority and the Canadian Pension Plan Investment Board, which invested through AMP, and PSP Investments, a large Canadian investment fund.
Other off-shore investors have been major contributors to the purchase of Centro Surfers Paradise with Challenger and Centro’s Hollywood Plaza Armada Funds Management in Adelaide.
According to Savills Investment Executive Pat De Maria, the off-shore investment accounts for a “significant part” of the approximately $2 billion funds spent in the two years to December.
Mr. De Maria explained that approximately $1.7 billion has been spent by foreign investors on direct retail investments in the past two years. These investors usually favour large regional or core CBD retail assets.
Over the past year, however, offshore groups have chosen to diversify and invested directly in neighbourhood and sub-regional centres.
Savills National Head of Research, Tony Crabb, said that the flow of offshore investment funds into Australia to direct and indirect retail was nearly $792 million in 2011. In the 12 months to March 2013, it was $1815 million. The increase in investment has been “remarkable,” according to Crabb.
Foreign investors bought 20 per cent of retail properties in the 12 months to March of this year. Mr. De Maria stated the retail sector’s encouraging performance would drive further interest in this popular investment class.
He points out that national retail turnover growth was up 3.2 per cent in the year ending in February and said that “good quality, tightly held assets” would continue to attract foreign buyers.
