Foreign investors have made a significant return to Australia’s commercial property market, driving sales to $11.5 billion in the first half of 2024.
According to JLL Research, investment into Australia’s office, retail, and industrial markets topped $7 billion in Q2 2024, a 60 per cent increase from Q1 and double the amount seen in Q2 2023.
The office and industrial sectors led the charge, accounting for 80 per cent of the Q2 total with $2.7 billion and $3 billion in sales respectively.
JLL’s Head of Capital Markets – Australia and New Zealand, Luke Billiau, said the jump in sales partly reflected ongoing appetite for industrial assets and more price discovery in the office sector.
“We’re encouraged by the activity in the first half and that it reflects the start of a rebound in capital markets activity,” Mr Billiau said.
Foreign investors have accounted for 24 per cent of total investment sales to date in 2024, up from a low of 16 per cent in 2023 but still below the 10-year average of 32 per cent.
Offshore buyers spent $2.8 billion in the six months to June 30, compared to $3.2 billion for the full year 2023.
Private capital was also a major contributor to deal volumes ($2.25 billion), followed by superannuation funds ($1.96 billion).
Notable transactions included Mitsui Fudosan acquiring a two-thirds stake in Mirvac’s 55 Pitt Street office development for $1.3 billion and Keppel REIT acquiring a 50 per cent stake in 255 George Street for $363.8 million.
Mr Billiau said the macro environment still presents challenges for investors, but risks are being priced in.
“More groups are starting to look to Australia for stability, growth and interesting investment opportunities,” he said.
While retail investment was subdued in the first half of 2024, JLL expects the outlook to remain positive due to changing institutional sentiment and a pipeline of transactions likely to contribute to volume in the second half of the year.
JLL estimates approximately $28 billion of total volume in 2024, up from $19.4 billion in 2023 and close to the long-term average of around $31 billion.
Mr Billiau said there’s a need to get comfortable with uncertainty in the current market conditions.
“We need to start getting comfortable with uncertainty,” he said.
“The global macro environment certainly still has some challenges that are weighing on investors.
“Still, risks are being priced in and more groups are starting to look to Australia for stability, growth and interesting investment opportunities.”
