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Asian investors account for two thirds of overseas investment into Australian Retail Real Estate in 2013

​​SINGAPORE, 18 FEBRUARY 2014 – 2013 marked the second largest year of activity in Australia’s Retail investment market from offshore investors since 1988, according to Jones Lang LaSalle Australia’s Shopping Centre Review and Outlook 2014 report. 

Of the AUD 1.4 billion of direct transactions to offshore buyers, two-thirds of this capital was from Asia. At AUD 876 million, this is up over 200 percent from just AUD 258 million in 2012.

Jones Lang LaSalle’s report shows record levels of activity in 2013, with offshore investors accounting for 20 percent of the AUD 7.1 billion of retail property purchased in 2013.

Australian Head of Retail Investments, Simon Rooney said, “Demand from offshore investors is being led by a number of sovereign wealth funds, global pension funds and some of the world’s largest unlisted real estate investors. We are seeing particular interest from Singaporean investors, which accounted for the large majority of acquisitions from the Asia Pacific region.”

Major Asia-based transactions in 2013 included a client of Lend Lease Investment Management purchasing a half-share in Erina Fair in New South Wales for AUD 397.1 million. 

Other sales that involved Singaporean-based companies included: Far East Organization purchasing Harbour Town Perth, WA for AUD 205 million, Hiap Hoe purchasing 206 Bourke Street in the Melbourne CBD for AUD 105 million, Rockworth Capital purchasing Phoenix Shopping Centre, WA for AUD 75.8 million and YTL Starhill Global REIT purchasing Plaza Arcade in the Perth CBD for AUD 48 million.

Australia remains an attractive investment destination to offshore investors, because it is perceived to be a safe haven, as having direct links to Asian economic growth, low volatility of real estate returns and positive long-term economic fundamentals. In addition, yields remain significantly higher than in many markets that compete with Australia for investment capital, despite recent high levels of investment activity and a broadly positive long term outlook for the sector locally.

The report shows that at the Australian domestic level, A-REITs continue to be the key driver of transactions on the sell side, while a combination of unlisted funds, domestic superannuation funds and offshore investors are the major drivers of activity on the buy side.  Offshore investors were relatively inactive on the sell side.

A recovery in discretionary retail spending which emerged in the second half of 2013 will support an improvement in asset level fundamentals, which is likely to fuel further confidence and investment into the retail sector by both domestic and offshore groups.

Looking ahead Simon Rooney commented: “We expect 2014 will be another highly active year due to significant and on-going market liquidity which will create a conducive environment for trading activity.” 

Rooney concluded: “The volume of capital seeking retail investment opportunities is significant, and currently exceeds the level of stock available. We are managing over AUD 10 billion of investor mandates from domestic and offshore sources, approximately half of which are seeking a passive position.”

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