Foreign investors were involved in 67 per cent of all commercial property transactions in Australia in the third quarter of 2012. In the same quarter of 2011, buyers in this group accounted for approximately 30 per cent of transactions.
Over half of the $1.88 billion in foreign sales in the quarter was the result of a single transaction. The Canada Pension Plan Board invested $1 billion in the Barangaroo development, which is located in Sydney. Foreign investors bought 32 properties during the quarter, bringing the total spent on commercial property transactions in the year to date to $6.3 billion.
According to Colliers, the largest direct transaction in the third quarter was the $105.1 million-dollar sale of the 29-story B-Grade office building located at 6–10 O’Connell Street in Sydney. Its new owner is the Singapore-based investment firm MGPA, which was making its first foray into buying commercial real estate in Australia.
The majority of commercial real estate transactions made by foreign investors in the third quarter were for offices. These types of purchases made up 78 per cent of transactions. Foreign buyers spent $1.5 billion on 12 office sales, including the Barangaroo deal, as well as an additional $470 million on other types of properties. The latter figure includes the $66 million the U.S.-based Hines Global REIT spent to acquire 100 Brookes Street in Fortitude Valley.
Industrial properties were the second most popular type of investments for foreign buyers. Asian investors spent $180 million to purchase 13 properties. Most of the properties sold were located in Victoria.
The hotel sector was also popular, with three properties worth $152 million bought by offshore investors. The Palazzo Versace Gold Coast, the Rendezvous Grand in Melbourne and the Hotel Enterprize in Melbourne were purchased by investors in Singapore and China.
Retail was the fourth-largest sector in Q3. European buyers spent $85 million to make four major purchases, including Pittwater Place at 10 Park Street, Mona Vale. The property was bought for $56.6 million and the new owner is German investment firm RREEF.
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