Victorian commercial sales touch record $9 billion: Savills
Commercial property sales – office, industrial, retail - in Victoria in the year to June touched a record high of nearly $9.4 billion and were nearly double the 10-year average, according to the latest Savills research.
The breakup includes more than $4.74 billion worth of office transactions, $1.87 billion in industrial transactions and $2.77 billion retail property transactions.
Savills Victorian manager Research & Consultancy, Monica Mondkar, said incremental increases in annual investment sales data to do with the natural appreciation in values was normal, however, recent sales levels had no historical parallel.
"Property sales figures generally rise and fall in correlation with the fluctuations of economic cycles, as do other asset classes. However, over the last five years commercial property investment has accelerated significantly at a time of relatively low global economic growth," she said.
From a low of $2.4 billion in June 2012, commercial sales touched $9.378 billion in 2016, according to the research. This was also 85 per cent up on the 10-year average of $5.05 billion.
"That is an unprecedented recovery driven by historically low interest rates and Australia’s safe haven status. Volatile global financial markets led investors to select core commercial property as a solid investment asset class,’’ Mondkar said.
Savills’ state director – CBD & Metropolitan Sales, Clinton Baxter, said the record spend was in part a reflection of Melbourne’s livability status and projections that it was on track to become Australia’s most populous city.
"There is no doubt that Melbourne has been very attractive to property investors – it is safe and secure on all economic, political and social fronts and offers excellent returns – but underlying that attraction is Melbourne’s widely acknowledged superior livability status, which is driving strong population and economic growth, and forecasts that it will become the nation’s demographic centre by 2050 or before.
"Of Australia’s two major cities, Melbourne has more affordable housing - which has been critical to population growth - and arguably a more stable employment market and easier public and private transport access, and they are the key factors behind the ABS’ most recent data which reveals seven out of the country’s top ten growth areas are in Greater Melbourne,’’ Baxter said.
He said yields were a further attraction particularly for foreign investors.
"Whilst our investment yields have firmed to record low levels across all asset classes, to global investors our yields still appear very attractive relative to comparable assets in cities such as Singapore, Hong Kong, Kuala Lumpur, Taipei, Dubai and most major US cities.’’
At a glance:
Office - $4.739 billion in sales; previous year $4.319 billion; five year average $3.266 billion. 99 properties sold. Foreign investors purchased 51 percent of the stock.
Industrial - $1.873 billion in sales; previous year $1.855 billion; five year average $1.23 billion; 112 properties sold. Funds purchased 32 per cent of stock.
Retail - $2.766 billion in sales; previous year $2.246 billion; five year average $1.84 billion, 158 properties were sold. Private investors purchased 33 per cent of stock.
Foreign investors dominate the markets with 38 per cent of purchases by value followed by private investors at 21 per cent and funds with 18 per cent.
Foreign investors had a particular predilection for office property with just over 50 per cent of purchases, while private investors took the lion’s share of retail property at just under 33 per cent and funds were the largest buyers of industrial property also at just under 33 per cent.
Baxter said the general appeal of Australia as a safe-haven investment destination was likely to become more pronounced with the recent Brexit and South China Sea concerns.
"Melbourne has clearly matured into a city capable of attracting a huge volume of off-shore capital from the full spectrum of investor classes ranging from wealthy privates, to major institutions, pension funds and sovereign wealth funds, and global factors which contribute to uncertainty for investors appear likely to work to enhance that status,’’ Baxter said.
