Home Property Australia Case needs to be made to lure European investors

Case needs to be made to lure European investors

  • October 18, 2022
  • by Property Australia

L-R: Luke Briscoe, Deborah Coakley, Sean McMahon and Daniel Wise on a panel at the Property Council Capital Markets Forum on 13 October 2022 in Melbourne.

It won’t come as a surprise to many in the industry that much of the foreign investment into Australian property comes from outside of Europe.

In 2020-21 the Foreign Investment Review Board said nearly $21 billion was invested into real estate by United States based investors, followed by Singapore with $14 billion, Canada with $7 billion and China spending $6.3 billion.

Germany spent $7.5 billion, the next continental European country on the list is the Netherlands with $2.5 billion.

Getting European investors to enter the Australian market is a question posed by many in the industry.

Deborah Coakley, Executive General Manager, Funds Management, Dexus and Capital Markets President, Property Council of Australia told a crowd at the Capital Markets Forum that the industry needs to ask itself why they should invest in Australia.

“Some of those markets are massive,” she said, “so the opportunity to manage the risk within their own home market is there so why take a currency risk?

“Why would Australia be a better place for them to have money, aside from the pure argument for diversification? What is that case for Australia that really differentiates it and gives it a position in someone’s portfolio?”

Coakley said many of these investors don’t have a huge amount of capital to redeploy into another market, like Australia, and that it costs a lot for them to do the research.

“So we need to make it really easy for them,” she said.

“We need to build a case for why – a product or a sector perhaps that really makes the case on a long-term basis for why.

“The vast majority of the investors we deal with are long term investors and if the opportunities right there, they’re still at the table.”

Sean McMahon, Chief Investment Officer, Charter Hall said Australia is not only seen as a safe haven but a “safe safe haven” with a strong and diversified economy and transparency being seen as key positives among offshore investors.

He also said Australia will be a net beneficiary of Singapore’s consolidation as the gateway hub for APAC investment.

Daniel Wise, Managing Director & CEO, Aliro said regional instability in the APAC region may help Australia, amplifying Australia’s position in the global market.

According to CBRE, real estate capital flows between Asia-Pacific (APAC), North America and Europe increased by 18 per cent year-over-year to US$56.6 billion in H1 2022, the highest first-half total since 2018.

Meanwhile, European cross-regional capital inflows increased by 31 per cent year-over-year to US$42 billion in H1.

The report noted that inflows into APAC were subdued, largely due to significant reductions in capital outflows from Europe.