Sydney soars to seventh for global investment
Sydney has arrived as a global investment hub, dragging $US5.7 billion ($7.2 billion) of offshore investment into its commercial property market last year and placing it seventh on a list of global cities for foreign investment, according to Knight Frank’s new Active Capital report.
Offshore buyers made up more than half (55 per cent) of Sydney’s commercial property deals last year, the report found.
Sydney was outranked by New York, which saw $US16.3bn of offshore money flow into commercial property, Central London, Paris, Berlin, Shanghai and Dublin. It beat Los Angeles, Hong Kong and San Francisco.
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But the depth of foreign investment compared with locals buying varied greatly between cities, Knight Frank said.
In New York, foreigners accounted for 40% of commercial property investments while in London offshore buyers hit 80% of deals last year.
Investors are searching worldwide for yield in the environment of low returns, with Sydney to continue attracting offshore funds, according to Jennelle Wilson, senior research director at Knight Frank.
“Investors are looking for security of income, liquidity and diversification. All equally important as are the ambitious corporate business plans of those looking to build global platforms,” Wilson says.
“Sydney has definitely been the focus of offshore investment, accounting for 45% of inflows for 2016 and 2017 to date, followed by Melbourne (32%) and Brisbane (10%).”
Nationally, the US has been the highest source of offshore funds at 31%, while Chinese investment dominated in Sydney at 34%.
Knight Frank joint head of institutional sales Paul Roberts says record levels of rental growth, significant public infrastructure improvements and low levels of net supply over the next three years will see continued demand from offshore investors.
Among the emerging international trends, the report flags the spread of multifamily residential as an investment class.
“In the emerging markets, such as Australia and the UK, interest and activity in the multihousing sector is growing rapidly,” the report says, noting this was off the back of the growth in purpose-built student housing.
It lists the main risks to global property markets as winner and loser nations from energy resources and geopolitical risks.
This article originally appeared on www.theaustralian.com.au/property.
