Australia Investment MarketBeat Q4 2015

The full report

Australia Investment Update Q4 2016

  • Investment momentum has continued to build over the year, with Q4 being the strongest quarter recorded for calendar year 2015 at $9.4bn. At the year’s end, total annual investment volume reached $29.9bn, falling 14% short of last year’s post-GFC record of $34.8bn.
  • The retail sector set a quarterly investment record with $3.0bn of assets transacting over Q4 2015. The final quarter figure followed steadily increasing activity through the year, resulting in an annual volume of $7.2bn – a 25% increase on 2014. Nevertheless, the office sector ended the year as the most transacted asset class, recording an annual volume of $14.9bn, accounting for almost 50% of the national volume. 
  • The flow of offshore capital into Australia not only continued, but intensified, in 2015. Following the $13.8bn invested by foreign entities into Australia in 2014, a further $15.4bn was invested in 2015. Singaporean-based investors ($4.5bn) continue to account for the majority of overseas capital in 2015, with Chinese investors ($3.7bn) in second place despite a lower number of transactions. International investors (those with a global platform) were significantly more active in 2015 committing $2.6bn – double their 2014 amount.
  • In looking to 2016, many of the market characteristics evident at the start of this year remain on show. The main difference being that the market is further through the cycle. Nevertheless, it does not appear that the investment market will significantly slow in the near term and so we expect volumes to be sustained at least over H1 2016.
  • Anticipated US Federal Reserve hikes will likely place upward pressure on Government bond yields, but this is not expected to flow onto the property sector in the near term. Rather there remains scope for further yield compression in selected markets and sectors as abundant domestic and offshore capital is yet to be deployed. In general core assets, or those with a strong value-add play, will remain in favour and generate the most competition.

Contact

Dominic Brown

Head of South East Asia / Australia and New Zealand Research
dominic.brown@cushwake.com