Record investment in commercial property

Record investment in commercial propertyInvestment in commercial property across the retail, industrial and office sectors reached a record high in the 2015 financial year, according to the Colliers International Australian Investment Review.Overall investment activity was up 19 per cent on the previous financial year, to a record $28.88 billion.”Both offshore and domestic investors demonstrated a continuing strong appetite for Australian commercial property,” says John Marasco, Colliers’ managing director of capital markets and investment services.The low interest rate environment, the falling Australian dollar and a stable economy have created “optimum conditions”, while the potential for growth has attracted offshore investors for the first time, Marasco explains.”Conditions for domestic investors have also been positive, so together demand for commercial property assets is at an all-time high.”Sydney is now the third most popular destination for global offshore investors, behind London and Manhattan, and ahead of Shanghai and Paris. London transacted $28.7 billion, Manhattan $12.2 billion, while global capital inflows to Sydney totalled $5.1 billion.More than $15 billion worth of office assets were transacted, up seven per cent on the previous year. Offshore private investors, particularly from mainland China and Hong Kong, purchased $1.11 billion in assets. The largest transaction was the partial sale of Tower 1 at Barangaroo (pictured) to Qatar Investment Authority and Australian Prime Property Fund for $875 million.In the industrial sector, $6.45 billion in assets changed hands, up 56 per cent, with REITS, super funds and sovereign wealth funds active buyers. The $253 million sale of the Coles distribution centre in Eastern Creek was the largest sale.Retail transactions were up 24 per cent to $7.541 billion. The largest single asset transaction was the sale of Mt Ommaney Centre in Brisbane for $416.25 million, which was acquired by US-based TIAA Henderson Real Estate and Federation Centres from AMP Capital.”Perhaps the greatest challenge for the industry is the lack of stock coming to market. Demand is certainly outweighing supply at present, and limited new supply is leading to yield compression across the board,” Marasco concludes.Read the Australian Investment Review below:Australian Investment Review – IndustrialAustralian Investment Review – OfficeAustralian Investment Review – Retail