Overseas purchases increase fourfold

Australian investors are spending four times the amount on overseas property compared to the same time last year, according to Jones Lang LaSalle research.

The investigation found that Australian investors injected $US5.3 billion into overseas real estate in the first half of 2006, compared to $US1.2 billion the year before.

A Jones Lang LaSalle spokesperson attributed this increase to superannuation funds looking for new areas in which to invest their ever-increasing pool of member contributions.

The United States received almost half of these purchases, making Australia the third largest cross border investor in the US, behind global and Middle Eastern buyers.

The nation’s interest also focused on European markets, particularly Germany (19 per cent), which was driven by Australian investor Record Realty, which bought seven office assets for $A565 million.

Asia Pacific took 20 per cent of Australia’s purchases, with Hong Kong being the main recipient of funds in this region (12 per cent).

According to John Talbot, head of capital markets at Jones Lang LaSalle, direct real estate investment increased substantially in Australia as well.

“Given the continued generation of investment funds through superannuation, a strong local economy and the continued appeal of commercial property as an asset class, direct real estate investment in Australia also increased by 7 per cent in the first half of 2006,” he said.

However, research shows that within Australia, foreign purchases outweighed foreign sales, making up 60 per cent of total cross border transactions, which is a reversal from the first half of 2005, where sales exceeded purchases.