Foreign investors taking the plunge in Australia

Foreign investors taking the plunge in AustraliaSavills Australia says foreign investors have shown an increasing interest in Australian property in recent times, but the level of interest shown during the last financial year was “unprecedented”.According to Savills Australia, foreign investment in Australian property has reached a historical high, with $5.9 billion outlaid in the last financial year, 60 per cent more than the $3.5 billion recorded in the previous 12 months.The majority of interest has been from Asia, with Asian investors accounting for $3.9 billion worth of acquisitions, or 67 per cent of sales by value. North American ($1.057 billion) and European ($913 billion) investors make up 18 per cent and 15 per cent of the total, respectively.Interest in CBD office buildings is particularly strong, with foreign investors accounting for nearly half of all purchasing activity for CBD office property in the past 12 months. Again, Asian investors have acquired the lion’s share, making up two-thirds of investment in office markets, with North American investors spending $932 million and European investors almost $740 million.And we might only be witnessing the tip of the iceberg. According to a report by Savills’ Shanghai office last year, called China Plc ventures overseas- Who’s buying and why?, Australia can reasonably expect a wave of capital to come from China in coming years. Not only has the Chinese domestic real estate investment market grown considerably in the past two decades, but investors have also been increasingly looking overseas to maintain growth and dynamism. With many investors having sampled the Australian real estate market and found the conditions to be right, their compatriots are following suit.According to Savills, “[In] the last 12 months buying activity is off the charts as far as recent history is concerned. It is almost as if they [Chinese investors] have been dipping their toe in the water, they like the temperature and now they are just diving right in.”To read the Savills Shanghai report China Plc ventures overseas – Who’s buying and why?, go to: http://www.savills.com.au/publications-pdf/savillsresearch-spotlight-china-ventures-os-august-2013.pdf