Investors look to Sydney and Melbourne

Investors look to Sydney and MelbourneCashed up international investors are looking beyond the gateway cities of Sydney and Melbourne, and beyond traditional asset classes, in their hunt for Australian investments, says chief executive of ANREV, Alan Dalgleish.”Capital is looking for a home, and if it can’t find a shiny A Grade office in Sydney, it will look further afield to ‘secondary’ cities like Perth and Brisbane, and to new markets, such as student housing and aged care facilities,” Dalgleish (pictured) says.In Melbourne last week for a series of events, including a young professionals event in conjunction with the Property Council, Dalgleish says market conditions remain highly competitive in Australia.”Australia is a transparent, liquid, securitised market, and subject to prevailing commercial property yields, will continue to get a lot of inbound interest from foreign investors,” he says.ANREV, the Asian Association for Investors in Non-listed Real Estate Vehicles Limited, was established in 2007 with nine founding members. Today, the network of 200 companies spans 18 countries across the Asia Pacific, Europe and North America.Members consist of large institutional investors and some of the world’s biggest fund managers.ANREV’s Investment Intentions Survey 2015, published in January, found Tokyo, Sydney, and ‘tier one’ cities in China and Melbourne were the top investment destinations, with Asia Pacific investors expected to increase their real estate allocations from 9.8 per cent to 11 per cent over the year.”The main reason investors are looking to Australia is because of its reputation,” says ANREV’s director of research and professional standards, Amelie Delaunay.”No other market offers such transparency and maturity. Investors, wanting international diversification, are looking at Australia because it offers everything – from listed property to unlisted funds, and across a range of sectors including office, residential, retail and industrial,” Delaunay adds.Regardless of their location, investors are choosing real estate for the diversification benefit of a multi-asset portfolio, with enhanced returns coming in second. ANREV finds that 59.4 per cent of Asia Pacific investors are expecting to increase their real estate portfolio allocation over the next two years.While most investors have their sights firmly set on Sydney and Melbourne – some investors are looking beyond the ‘gateway’ cities.”International investors can have very fixed ideas about investment opportunities, so these secondary investment destinations need to think about education,” Dalgleish explains.”However, there is so much money looking for a home, that if other cities have good projects available, investors will be interested.”