Australian investment volumes eclipse record

Australian investment volumes eclipse recordInvestment volumes in Australian commercial real estate reached $10.7 billion in the third quarter of 2014, according to an analysis of DTZ Research’s Investment Transaction Database.The figure marks an increase of 18 per cent on the Q2 figure of $9.1 billion, with volumes surpassing those for 2013 due to the size of certain deals. In particular, DTZ said the privatisation of an AREIT boosted volumes, with the acquisition of Australand by Frasers Centrepoint contributing $2.6 billion to the quarterly total. Overall, privatisations of AREITs in 2014 stand at $6.3 billion so far.According to Dr Dominic Brown, head of South-East Asia/Australia and New Zealand research at DTZ, investment volumes in 2013 set a post-GFC record at $22.4 billion; 2014 levels have already eclipsed this, with $24.7 billion in total volumes recorded to date.”While AREIT privatisations have helped to lift this number in 2014, volumes are still up by almost 15 per cent year-on-year at $18.3 billion when these transactions are discounted,” said Brown.DTZ’s data shows continued healthy activity in Australia from offshore investors, making up per cent of the total volume ($4.4 billion) over the quarter. DTZ noted “considerable diversity in the sources of capital reported”, with representation from all continental regions in Q3 2014.The biggest investment came from Singaporeans at $2.8 billion, while $580 million came from Chinese investors.Multi-asset deals have garnered much attention over the quarter; three such transactions accounted for $3.1 billion, predominantly across the office and industrial sectors.DTZ said investors remain focused on the most mature and liquid markets as abundant capital continues to circle Australian property assets (See table 1).”Over $5 billion was invested in NSW and Victoria over the first three quarters of 2014, with these markets offering a range of opportunities up the risk curve,” said Brown.”National portfolios also continue to attract interest as they provide investors with an excellent opportunity to build scale and diversify between geographical markets quickly.”DTZ forecasts continued momentum into the next quarter of 2014, with several high-profile assets currently being actively marketed.”Consequently, volumes are forecast to surpass the total recorded for 2013, even discounting the AREIT privatisations. Yields are also expected to witness downward pressure as competition remains among investors deploying capital,” said DTZ.