Despite international travel restrictions, Australia saw a strong year in cross-border investment attracting capital from both within and outside Asia Pacific in 2020. Do you foresee this trend to continue and any changes in how international investors perform due diligence during/after the pandemic?
Firstly, we expect to see this current trend of activity from offshore, as well as local investors, continue and actually strengthen in 2021/2022 as Australia seemingly recovers from the global pandemic.
Prior to 2020, the Australian commercial and industrial sectors were some of the most active and attractive global markets and we experienced increased competition from North America and Hong Kong capital such as Blackstone, PGIM and ESR, adding to the already strong demand from Singaporean and domestic capital.
After a very slow first six months of 2020, as the year progressed, we saw the emergence of core opportunities in the Australian market. There was strong demand in the second half of 2020 from offshore groups and new entrants into the commercial sector. Evidence of this is our recent campaign for 1 Bligh Street, Sydney which closed with more than A$30BN of bids, as well as Investa coming to market to seek a partner for three Sydney CBD assets with a combined value of A$900M. Currently the Milestone industrial and logistics A$3.5BN offering, one of the largest offerings in Australia’s history, is experiencing extremely strong demand from a combination of international and local capital investors.
Despite the pandemic, overseas investors have been very active in the Australian market through 2020. We saw offshore investors account for 22.4% of deals in 2020, up from 10% in 2018. To date in 2021 this has been 69.6%. Some of these groups have established offices within Australia and others are using local asset managers to conduct their underwrite and due diligence. If Australia can maintain our current position in managing the virus, we see It becoming an even more popular destination for capital.
These opinions are the author’s own and do not necessarily reflect the views of Cushman & Wakefield. To find out more about how Josh Cullen views opportunities across the Asia Pacific retail and office sectors, click his profile and get in touch. For more on investment activity and opportunities across Asia Pacific, visit the APAC Real Estate Investment Hub.