SYDNEY, April 12, 2021 – Investment into Australian commercial real estate continued to record strong quarterly volumes following its rebound in the second half of 2020. Total investment for the quarter of $4.5bn was led by the office market and represented a 50% increase on the $3bn total recorded in Q1 2020.
Cushman & Wakefield’s latest quarterly Investment MarketBeat shows investment into the office market of $2.6bn, its third highest Q1 since the series began in 2009. This accounted for nearly 60% of total investment for the quarter and was significantly stronger than the COVID-19-impacted Q1 2020 result of $1.6bn.
A number of major office transactions were completed during the quarter, including Investa and Manulife purchasing 39 Martin Place from Macquarie Group for $800 million. The newly formed Mercatus Dexus Australia Partnership also snapped up CBUS’ one third stake in 1 Bligh Street for $375 million, which helped cement Singapore as the largest source of foreign capital for the quarter.
Alternative commercial real estate assets, which includes hotels, pubs, service stations, student accommodation, serviced apartments, self-storage, aged, healthcare and childcare came in as the second highest category for investment volumes, recording a solid $804 million for the quarter.
Volumes for alternative assets were boosted significantly by Aware Super acquiring a $468 million stake in the Lendlease retirement village portfolio, and the purchase of the Primus Hotel in Sydney for $132 million by Pro-Invest from the Greenland Group. For retail, 17 retail transactions were completed in Q1 for a total value of $640 million, the lowest quarterly transaction value since 2012.
Investment into industrial property also cooled during the quarter, with 21 transactions totalling $425 million. Although relatively subdued, total volumes will be boosted by two key transactions including Blackstone’s planned $3.5bn logistics portfolio sale and the soon to be completed $1.65bn purchase of Moorebank Logistics Park by Logos Property Services from Qube Holdings.
Cushman & Wakefield’s Managing Director Australia and New Zealand, Simon Fenn, said: “Given Australia’s success in controlling outbreaks and functioning largely COVID-19 free, institutional investors are signalling their confidence in the recovering economy and the return of workers to the office moving ahead of many global locations.”
“We are continuing to see a higher volume of office assets trading with a healthy pipeline. We are also starting to see demand from offshore purchasers track back towards pre-pandemic levels.”
Cushman & Wakefield’s National Director, Research, John Sears said: “Total investment volumes were buoyed by a strong performing office market, highlighting investor confidence in Australian CBDs. While industrial volumes were subdued, Q1 volumes are typically lower, and a number of major deals not yet completed will boost these numbers in the months ahead.”
“Current conditions provide a solid foundation for further economic recovery once an effective vaccine roll out is completed. We expect demand from overseas investors to grow further once travel restrictions ease, which will also be helped if the Foreign Investment Review Board reverses additional regulations introduced during the pandemic.”
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