Commercial real estate investment volumes in Australia and New Zealand are predicted to lift by 10 per cent this year, according to new forecasts from CBRE.
CBRE predicted that foreign investment would be a key driver of growth in 2022, as the government eases border rules.
While foreign investment in the region hit a new record in 2021, CBRE said that nearly half of all deals involving foreign capital were a result of partnerships between international groups and local fund managers.
“Many investors without a team in Australia or strong links to a local partnership have largely been inactive throughout the pandemic. This is likely to change once international borders open,” the firm said.
Meanwhile, CBRE indicated that Australian super funds are currently underweight property in their portfolios with an allocation of 7.7 per cent against the long-term average of 8.2 per cent.
The firm estimated that funds could drive an additional $68 billion of inflows into property over the next two years, if their allocations return to the long-term average.
“Some of this might occur through capital value appreciation, but significant capital will also need to be deployed across the major sectors to make up the short fall,” CBRE said.
“This will be a significant driver of transaction activity across the region, as well as potential for new listed REITs to be created to cater for this wave of capital.”
Domestic investment is also expected to be driven by the scheduled increases to the super guarantee.
Additionally, immigration, residential prices and commercial rent growth are tipped to contribute to the performance of the property market moving forward.
“Australia’s focus on returning citizens and skilled migrants will be one of the main drivers of the speed of recovery in the real estate sector,” said CBRE’s head of research, Pacific, Sameer Chopra.
“An inflow of 490,000 migrants by 2024 could set the scene for an incremental 900,000 square metres of office space, 200,000 dwellings, 2,200,000 square metres of industrial space, and $6.7 billion of retail spend.”
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
