Regional real estate investors show intentions

by AB20 Mar 2014
Regional property investors have chosen Australia as the second most likely place they will buy property in throughout this year, but there may be a silver lining for domestic property hunters being priced out the market.

The CBRE investor intentions survey gauged the appetite and outlook of Asia-Pacific real estate investors for the rest of the year, and found China was the most popular place for cross-border property investment.

However, Australia ranked number one on actual investment last year, accounting for 35% of cross border investment.

CBRE’s Australian head of research Stephen McNabb suggested foreign capital inflows to the Australian market could slow over this year as the country competes with China and other growth regions for global capital.

“We expect a slowing – not an exodus – in capital inflows. 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 of so,” he said.

CBRE international investments senior director Michael Andrew said there were also signs investor interest was broadening to secondary markets outside the main CBDs.

The survey showed Sydney and Melbourne ranked third and fourth respectively in relation to city investor preference, after Tokyo and Shanghai.

“Australia is still witnessing very strong demand for core real estate across all sectors, however 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’s,” Andrew said.

Meanwhile, the government announced earlier this week it is investigating foreign investment laws amid fears Chinese investors may be pricing local home buyers out of the market.

The Standing Committee on Economics will consider whether the current laws are having a distorting impact on house prices, according to committee chair Kelly O’Dwyer.