The countries driving inbound investment

by AB18 May 2018

The last year saw a steep increase in Australian property deals originating in the UK and US. Ansarada CEO, Sam Riley, discusses the key trends  

In the last quarter, the biggest movements in property were a result of new deal commencements across the sector, increasing by 20% year on year. Industrial real estate sectors, in particular, demonstrated strong growth, with Sydney and Melbourne taking the bulk of deals and pushing land value averages upwards. Growing developer confidence has driven industrial supply in Sydney especially. The growth in e-commerce is driving demand for warehouses and logistics facilities, boosting the transaction volumes and values for commercial real estate in this sector, also.

However, according to the first Indicators report, it is overseas interest that drives the market at this time.

Indicators was created to provide comparative real-time insight on market transactions. By trawling data from more than 20,000 recently commenced or closed deals, Indicators demonstrates new patterns and trends and reports them as they emerge.

Indicators is published by Ansarada, and its CEO, Sam Riley, says the report is part of an “ongoing commitment to helping businesses and their advisors prepare for material events”.

“For Ansarada, Indicators is simply the next step to unlocking more value from the wealth of data found in our deal rooms for the benefit of dealmakers everywhere," he adds.

The report is based on aggregated and anonymised data from deals in Ansarada’s virtual data rooms over the past two years, and offers new insight across 11 industries under the Global Industry Classification Standard and 10 different transaction types.

“The growth of interest coming from the UK and the US shows no signs of slowing” - Sam Riley, CEO Ansarada

While the first report demonstrated a steep rise in new deal commencements and growth in commercial real estate, it also showed a steep growth in interest from investors in the UK and US. These markets represented 12% and 18% of offshore deals respectively last year, but the YoY figures confirm a stronger trend.

“Interest from the UK increased 150% between 2016-17, with post-Brexit uncertainty driving dealmakers to look for alternate investment opportunities in Australia,” Riley says.

The US is also gaining momentum, with an increase of 84% over the same period. Many claim the draw remains lifestyle and investment related – an attraction to beauty over brains, rather than Australia’s reputation as a hub for technological innovation and knowledge.

“The growth of interest coming from the UK and the US shows no signs of slowing, so 2018 could see further investment across Australia from these areas,” Riley adds.

In addition, demand from other APAC countries remained strong, comprising a 56% share of total overseas investment last year.

The news comes as Australia’s strongest overseas market, China, faces new capital controls, which could threaten property transaction rates in Australia, particularly new housing stock. Figures from Credit Suisse for the period January to June 2017, show Chinese buyers represented almost 25% of all new build buyers in Sydney and 15% in Melbourne.

New regulations imposed in China – designed to keep Chinese wealth within the country’s banks and borders – allow an annual quota of US$50,000 for overseas transfers and transactions.