Asia Pacific real estate investors have nominated Australia as the top cross-border investment destination for the second consecutive year in CBRE’s Asia Pacific Investor Intentions Survey 2017.
Some 29% of respondents identified Australia as their leading country for investment – double that of second placed Japan.
The survey also identified that Asia Pacific real estate investors would be motivated by fundamental investment objectives, including seeking favourable yield spreads and adopting higher risk/return strategies.
This was highlighted by the fact that 37% of respondents identified ‘chasing yield spread’ as the main motivation for investing in real estate, compared to 15% in 2016. Investors also indicated a stronger appetite for higher risk assets due to the potential return.
CBRE’s Head of Research, Australia, Stephen McNabb said; “A significant result for Australia's market is that more investors are seeking yield spread over government bonds. Four markets in Australia - Sydney, Melbourne, Brisbane and Perth - offer a yield spread of nearly 200bp and above. In addition, Sydney and Melbourne are currently supported by solid income growth potential. This is consistent with Australia being the number one preference for cross border investors in 2017 and the fact that the gap had widened between Australia and the next two most preferred markets, being Japan and China.”
Interest in Japan has meanwhile diminished amid worries that fundamentals might be peaking along with weaker economic growth. In China, investors’ interest is driven by strong economic fundamentals and the opportunity to purchase undervalued assets, however, current market conditions pose a challenge when seeking a positive yield spread.
CBRE Executive Managing Director, Capital Markets, Pacific, Bruce Baker noted that global investors continued to target both core and core plus real estate in Australia’s top tier markets.
“Key fundamentals, including the performance of the Australian economy combined with our property market liquidity, stabilised system of government and comparative returns continues to attract global capital,” Mr Baker said.
Some 29% of respondents identified Australia as their leading country for investment – double that of second placed Japan.
The survey also identified that Asia Pacific real estate investors would be motivated by fundamental investment objectives, including seeking favourable yield spreads and adopting higher risk/return strategies.
This was highlighted by the fact that 37% of respondents identified ‘chasing yield spread’ as the main motivation for investing in real estate, compared to 15% in 2016. Investors also indicated a stronger appetite for higher risk assets due to the potential return.
CBRE’s Head of Research, Australia, Stephen McNabb said; “A significant result for Australia's market is that more investors are seeking yield spread over government bonds. Four markets in Australia - Sydney, Melbourne, Brisbane and Perth - offer a yield spread of nearly 200bp and above. In addition, Sydney and Melbourne are currently supported by solid income growth potential. This is consistent with Australia being the number one preference for cross border investors in 2017 and the fact that the gap had widened between Australia and the next two most preferred markets, being Japan and China.”
Interest in Japan has meanwhile diminished amid worries that fundamentals might be peaking along with weaker economic growth. In China, investors’ interest is driven by strong economic fundamentals and the opportunity to purchase undervalued assets, however, current market conditions pose a challenge when seeking a positive yield spread.
CBRE Executive Managing Director, Capital Markets, Pacific, Bruce Baker noted that global investors continued to target both core and core plus real estate in Australia’s top tier markets.
“Key fundamentals, including the performance of the Australian economy combined with our property market liquidity, stabilised system of government and comparative returns continues to attract global capital,” Mr Baker said.
For Australian/international news or global stories, follow us on Twitter: @cbreaustralia
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
