Foreign investors accounted for 56% of the $8.6 billion worth of commercial sales in the September quarter... Negative gearing talk all hot air, says one expert...
Foreign investment in commercial real estate reaches record levels
Analysis by CBRE shows that foreign investors accounted for 56% of the $8.6 billion worth of commercial sales in the September quarter. That is the highest proportion of sales to offshore buyers in the 10 years the figures have been tracked.
The level of overseas purchasing activity had pushed total sales in the quarter 8.5% higher than at the same time last year.
CBRE’s Australian research head Stephen McNabb said Chinese investors have been the driving force behind the growth, and the figures put Australia’s commercial real estate market on track to break more records.
“Given the current level of transaction activity we are on pace to reach the record $29.6 billion in annual sales recorded during 2014,” McNabb said.
“The major source of new capital has been China, with Australia attracting close to 25% of the US$6.5 billion in Chinese investment capital released into global real estate markets in the first half of this year,” he said
CBRE capital markets executive managing director Mark Granter said the surge of Chinese capital had been initially driven by private investors and developers, but that major institutional investors are increasingly becoming involved.
“As expected, we are starting to see the larger Chinese life insurers target opportunities here as they look at geographic diversification to balance their investment portfolios,” Granter said.
“These investors are targeting major gateway cities, with Sydney and Melbourne being high on the radar alongside destinations such as New York, London and Singapore.”
Major Australian acquisitions in the quarter include the $2.5 billion purchase of the Investa portfolio by China Investment Corporation.
Singapore’s Ascendas Real Estate Investment Trust was another significant investor during the period, having snapped up a portfolio of 26 logistics properties from GIC in a deal valued at $1.01 billion.
The net investment position of offshore investors now totals $24 billion.
Negative gearing talk all hot air, says one expert
The latest round of speculation on the future of property tax arrangements is unlikely to result in any changes, according to one property expert.
According to a Fairfax media report last week, Malcolm Turnbull’s rise to the Prime Minister’s office has increased the likelihood of changes to tax arrangements such as capital gains concessions and negative gearing.
The report said that government, business groups, unions and welfare groups agreed at a meeting last week that the issues should be addressed.
"There was a very, very strong agreement that concessions needed to be looked at," Business Council of Australia chief executive Jennifer Westacott told the Sydney Morning Herald.
For Ian Hosking Richards, chief executive officer of Rocket Property Group, the talk about changes - especially to negative gearing - is nothing but “hot air.”
“What’s being talked about now are the same things that have been talked about for the last 20 years,” Hosking Richards said.
“It’s just hot air, politicians and others always talk about it and they’ll just keep talking about it,” he said.
While he doesn’t predict any changes, Hosking Richards is somewhat surprised people are still talking about the abolishment of negative gearing given what happened under the Hawke/Keating governments in the 1980s.
“They got rid of negative gearing in the ‘80s and then 18 months later they bought it back in,” he said.
“I think that shows that getting rid of it didn’t do anything positive. All that happened was that rents went up, and that’s what would happen if they decided to get rid of it now.”
Negative gearing has been a topic of debate recently, with the Reserve Bank as well as the Labor Party and the Greens all calling for action this earlier this year.
Analysis by CBRE shows that foreign investors accounted for 56% of the $8.6 billion worth of commercial sales in the September quarter. That is the highest proportion of sales to offshore buyers in the 10 years the figures have been tracked.
The level of overseas purchasing activity had pushed total sales in the quarter 8.5% higher than at the same time last year.
CBRE’s Australian research head Stephen McNabb said Chinese investors have been the driving force behind the growth, and the figures put Australia’s commercial real estate market on track to break more records.
“Given the current level of transaction activity we are on pace to reach the record $29.6 billion in annual sales recorded during 2014,” McNabb said.
“The major source of new capital has been China, with Australia attracting close to 25% of the US$6.5 billion in Chinese investment capital released into global real estate markets in the first half of this year,” he said
CBRE capital markets executive managing director Mark Granter said the surge of Chinese capital had been initially driven by private investors and developers, but that major institutional investors are increasingly becoming involved.
“As expected, we are starting to see the larger Chinese life insurers target opportunities here as they look at geographic diversification to balance their investment portfolios,” Granter said.
“These investors are targeting major gateway cities, with Sydney and Melbourne being high on the radar alongside destinations such as New York, London and Singapore.”
Major Australian acquisitions in the quarter include the $2.5 billion purchase of the Investa portfolio by China Investment Corporation.
Singapore’s Ascendas Real Estate Investment Trust was another significant investor during the period, having snapped up a portfolio of 26 logistics properties from GIC in a deal valued at $1.01 billion.
The net investment position of offshore investors now totals $24 billion.
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Negative gearing talk all hot air, says one expert
The latest round of speculation on the future of property tax arrangements is unlikely to result in any changes, according to one property expert.
According to a Fairfax media report last week, Malcolm Turnbull’s rise to the Prime Minister’s office has increased the likelihood of changes to tax arrangements such as capital gains concessions and negative gearing.
The report said that government, business groups, unions and welfare groups agreed at a meeting last week that the issues should be addressed.
"There was a very, very strong agreement that concessions needed to be looked at," Business Council of Australia chief executive Jennifer Westacott told the Sydney Morning Herald.
For Ian Hosking Richards, chief executive officer of Rocket Property Group, the talk about changes - especially to negative gearing - is nothing but “hot air.”
“What’s being talked about now are the same things that have been talked about for the last 20 years,” Hosking Richards said.
“It’s just hot air, politicians and others always talk about it and they’ll just keep talking about it,” he said.
While he doesn’t predict any changes, Hosking Richards is somewhat surprised people are still talking about the abolishment of negative gearing given what happened under the Hawke/Keating governments in the 1980s.
“They got rid of negative gearing in the ‘80s and then 18 months later they bought it back in,” he said.
“I think that shows that getting rid of it didn’t do anything positive. All that happened was that rents went up, and that’s what would happen if they decided to get rid of it now.”
Negative gearing has been a topic of debate recently, with the Reserve Bank as well as the Labor Party and the Greens all calling for action this earlier this year.
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