Why overseas buyers love Australian commercial real estate

Australia's dollar may be considered high compared with other countries, but that hasn't dampened overseas investors, who are clamouring to buy up our commercial property.

And this only serves to confirm Australia's "safe-haven status", being closely aligned with the Asian region.

During the 1970s, it was UK property companies that dominated the Australian commercial scene. Then Japan led the boom period during the 1980s. And it was southeast Asia that mopped up the aftermath, throughout the 1990s.

This time around, there is a spread of buyers — coming from the US, Asia and Europe. And Australia appears to be appealing to each of these investors for different reasons.

According to David Rees (head of JLL Research): "For US and European investors, Australia is an easy way into Asia-Pacific; for Asian investors it is an easy way out [of the region] into more transparent, well-regulated markets."

Principally, the buyers for Australian property are coming from the Asian region — cashed-up pension and property funds. However, there has also been strong interest by US and German investors as well.

Currently, these purchases represent about 10% to 15% of the market by value. And this is being seen as a long-term (rather than short-term) trend.

According to DTZ, in 2010 property investment within the Asia-Pacific region topped $158 billion for the first time — more than all of the investment undertaken throughout Europe.

Bottom Line: Even if some local investors are being overly cautious, overseas buyers realise the Australian commercial property market has now begun what will prove to be a strong upswing.

Chris Lang is a commercial property investor and gives keynote speeches and regular seminars on the best way to invest in commercial property. He maintains a blog, his-best.biz, which he updates regularly about the best way to get the most out of your commercial property investment.