Thirty-seven percent of the respondents selected Melbourne as their preferred market to invest in this year, up from 20 percent in 2018, CBRE’s annual Australian Investors Intentions survey shows.
In comparison, Sydney was the favoured market for 30 percent of investors surveyed.
CBRE’s Research Associate Director Ben Martin-Henry attributed this to investors seeking to buy into the “strong economic fundamentals that are driving rental growth”.
Stronger returns in Perth has pushed the city back onto Australian investors’ shopping lists, with the proportion of investors nominating the city as their preferred investment market surging to 10 percent from 2 percent in 2018.
The research also indicates that commercial property deals in 2019 could eclipse last year.
Mr Martin-Henry said investors expect both buying and selling activity to be higher in 2019 than last year.
“If this ends up being the case, then we can expect higher sales volumes, with 35 percent of investors surveyed indicating that they plan on increasing their divestment activities and 32 percent indicating they will be more acquisitive,” he said.
Mark Coster, CBRE’s Senior Managing Director of capital markets, said the survey reveals that Australia is ranks third on the list of preferred countries of global buyers seeking to invest outside their home market.
The US was the most popular market globally, followed by the UK, but Australia was more favourable than China, Japan and Germany.
Meanwhile industrial property has beaten offices as the top commercial real estate sector for Australians to invest in in 2019, the survey shows.
“This follows the global trend, with industrial and logistics having been the most desirable sector for the past three years,” Mr Coster noted.
Office property was the second most popular sector for Australian investors, with 29 percent of respondents saying offices were their preferred market sector. This is down from 45 percent last year.
The build-to-rent sector climbed to third place on industry players’ list of favoured investments, ahead of retail, as investors eye the emerging asset class.
Falling land prices could potentially be the catalyst for the sector in coming years, as cheaper land could make commercial build-to-rent projects more financially viable, a CBRE analysis indicated.
“At a macro level, investors intend to increase their weighting to value-add and opportunistic investments and have a growing interest in alternative asset types, such as real estate debt and healthcare,” Mr Martin-Henry said.
“They also believe high asset pricing and a potential global economic shock are highest on the list of obstacles to invest in property and are the biggest potential threats to the market.”
Cover Photo: Melbourne’s economic fundamentals are convincing investors to pump money into the city’s commercial real estate. (Photo: Pixabay)