Real estate service provider CBRE has released new data from its Australia Capital Flows report that highlights the most prominent investors in the Australian property market. CBRE’s report tracks investment across the living, office, industrial, retail and hotel sectors.
Japanese investors trumped buyers from North America, Hong Kong, and Singapore to be the most active offshore capital in Australia’s property sector last year, the research shows. It highlights Japanese buyers snapped up just over $2bn in Australian assets last year, well up on the $140m invested in 2022.
“Ultra-low interest rates in Japan have given those investors a competitive advantage compared to other countries and Australian groups. Repricing in some sectors continued to limit deal flows. However, on a positive note, the living and hotels sectors observed an increase in transaction activity, up 39% and 11% respectively, underpinned by strong investment fundamentals.”
Tom Broderick, Australian Head of Capital Markets Research, CBRE
North America was the next biggest source of offshore capital at $1.6bn, down 17% year-on-year, followed in equal place by Hong Kong and Singapore at c.$1bn, with Singaporean investment dropping 65% year-on-year. European investment also declined significantly, with just $180m invested in 2023.
CBRE’s data shows that Japanese investors were most active in the living and office sectors in 2023, with major investments including Mitsubishi Estate’s investment in Mirvac’s $1.8bn Build to Rent venture.
Japan’s largest homebuilder Daiwa House was another major player. The company partnered with Lendlease to develop the Melbourne Quarter Build to Rent project – a 45-level Build to Rent tower. Factoring in both domestic and offshore investment activity, the report highlights that national investment volumes dropped by 31% year-on-year to $24.1bn in 2023.
CBRE is also forecasting deal activity to begin trending up this year before a resurgence in 2025.
“The outlook for interest rates in Australia has improved significantly in recent months, with the potential for multiple cuts in 2024. As such, we anticipate an acceleration of investment activity in the second half of this year.”
Flint Davidson, Pacific Head of Capital Markets, CBRE
