Melbourne trumps Sydney among Aussie investors: report
In almost every sphere, Melbourne and Sydney are sworn enemies and if a new survey is to be believed, the southern capital has just taken a major title from the harbourside city; as the preferred destination for Australian-based commercial property capital.
In its annual Australian Investors Intentions survey, leading commercial real estate services and investment firm CBRE has discovered institutional investors have an increasingly positive view of Melbourne.
In the survey, 37% of investors nominated Melbourne as their “preferred market” for 2019, up from just 20%, and ahead of Sydney, which often leads such polls, at 30%.
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CBRE’s associate director of research Ben Martin-Henry says commercial investors are buying into the “strong economic fundamentals that are driving rental growth” in the Victorian capital.
Martin-Henry says commercial sales activity across the country in 2019 could eclipse last year, with both buying and selling expectations higher, according to the survey.
“If this ends up being the case, then we can expect higher sales volumes, with 35 per cent of investors surveyed indicating that they plan on increasing their divestment activities and 32% indicating they will be more acquisitive,” Martin-Henry says.
He says Perth is also back on the Australian investor radar, due to the higher yields achievable there relative to other markets.
Ten per cent of those surveyed named the West Australian capital as their preferred investment destination, up from just 2% last year.
CBRE’s senior managing director of capital markets Mark Coster says industrial and logistics has overtaken office as the most desirable sector for Australian investors in 2019.
“This follows a global trend, with industrial and logistics having been the most desirable sector for the past three years.”
He says while office investments are second on the shopping list of Australian investors, only 29% of investors listed office as their preferred market sector, well down from 45% last year.
“The build-to-rent/residential sector climbed to third place, ahead of retail, as investors continue to investigate opportunities in the nascent Australian build-to-rent asset class.
“At a macro level, investors intend to increase their weighting to value-add and opportunistic investments and have a growing interest in alternative asset types, such as real estate debt and healthcare,” Martin-Henry says.
“They also believe high asset pricing (75%) and a potential global economic shock (31%) are highest on the list of obstacles to invest in property and are the biggest potential threats to the market.”
At a global level, Australia came in third as a preferred destination, behind the US and the UK and ahead of China, Japan and Germany.