Adelaide

International investment in Adelaide hits new high

Foreign buyers purchased a record $1.04 billion worth of assets in Adelaide in 2019, more than half of total sales in the city, according to CBRE’s latest Market Outlook report.

10 Mar 2020

Foreign buyers purchased a record $1.04 billion worth of assets in Adelaide in 2019, more than half of total sales in the city, according to CBRE’s latest Market Outlook report.

The South Australian capital has become a favourite among international and interstate investors, offering affordability, attractive relative returns and a stable economic landscape.

> View the full CBRE Australia Real Estate Market Outlook 2020
> View the full Adelaide City Outlook 2020

In 2019, foreign buyer spending passed $1 billion for the first time, more than doubling the erstwhile record of $468 million from 2017 and the 10-year average of $450 million.

That also represented 51% of the total spending in Adelaide, outweighing Australian buyers’ spend for the first time and representing a significant spike from 12.2% in 2018.

Among Australia’s major markets, only Perth on 70% recorded a higher rate of spending by offshore investors. 

The number of international office buyers has doubled in the past five years, now accounting for 8% of sales in the past 13 years, the Market Outlook also states.

“Offshore and eastern seaboard investors have become more and more active in the Adelaide market,” CBRE Capital Markets Director Ian Thomas said.

“The office sector has attracted capital from the USA, Europe and Singapore, with buyers looking at a range of opportunities, including secondary assets with value-add potential.”

Mr Thomas noted that office sales exceeded $800 million in 2019, with Adelaide assets shown to reduce risk in a diversified portfolio.

CBRE’s research indicates Adelaide will maintain the nation’s highest prime office yields through to 2022, and strongest five-year income and capital return forecasts.

“Against the headwinds of uncertainty around global economic policy, non-core locations such as Adelaide are providing greater security,” Mr Thomas added.

The broader Adelaide economy is also set to benefit from a combined federal and state infrastructure spend of $12.9 billion across the next five years.

CBRE Senior Research Analyst Aiden Bresolin said there was a pronounced focus on innovative industries such as specialised manufacturing for defence, renewables, space travel and medical science.

Investment in Lot Fourteen, the former Royal Adelaide Hospital site, is the centrepiece with plans for the precinct to serve as the new headquarters for the Australian Space Agency.

“Funding for emerging and growth industries is set to create more than 4,000 jobs in Adelaide over the next five years,” he said.

“The government strategy aims to stop Adelaide’s young professional ‘brain drain’, with fewer young people living in the state than in the 1980s. It’s the largest infrastructure spend ever secured by the state, which will help stimulate the economy.”

Mr Bresolin noted that improved transport links would also better connect Adelaide with its surrounds including the Outer North and South precincts, benefitting industrial and manufacturing operators in those areas.

A total of 91,500sqm worth of new industrial supply will come online across Adelaide in 2020, including the development of the Metcash Distribution Centre in the city’s north.

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About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), 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 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 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.

Disclaimer:

Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of 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 https://www.cbre.com.