Property follows global path

Gone are the days of state bickering of over who’s got the best beer, weather and hot commercial property between Sydney and Melbourne. It is now Sydney verse’s the rest of the world.

The Avdiev Group managing director Rita Avdiev says the recent change in the property market is a result of strong competition and opportunities from offshore

investors.

Gone are the days of state bickering of over who’s got the best beer, weather and hot commercial property between Sydney and Melbourne. It is now Sydney verse’s the rest of the world.

The Avdiev Group managing director Rita Avdiev says the recent change in the property market is a result of strong competition and opportunities from offshore

investors.

“Sydney now has new competition in the global economy. Melbourne is no longer the number one competitor for Sydney,” she says.

Avdiev says Sydney has been branded Australia’s international class capital, and faces fierce international competition. She says Sydney’s leg up was fuelled by its transforma-tion into a global financial centre, by attracting the majority of the

financial services head offices and the development of the dot.com corridor. But now Sydney is facing increased competition from international rivals — Singapore, Shanghai and neighbouring Asian

counterparts.

“Investment is no longer regional or national it is global. Investors are going to make money where ever it is possible to make money,” she says.

“Cities like Singapore, the true 21 century city with its 90 to 95 storey buildings and bamboo scaffolding is only a glimpse of the level of competition cities

like Sydney now face.”

But this is not to say that the ‘coat hanger’ imagery of Australia’s Harbour Bridge has lost its lustre

against the multicoloured scenery of Asia. Avdiev says it all merely depends on the eco-nomic conditions, the space usage and how rents are going to look in the

next few years.

“This is a fairly new development, however, some Australian companies, like Westfield and Lend Lease have spread to the United States and have begun

investing on a global scale for at least the last seven years. And now more companies are looking at establishing offshore property and investing

overseas,” she says.

The view, that investment activity of this nature will continue is echoed by Real Estate Institute NSW (REINSW) president John Hill who says Sydney is now

part of a global trend.

Hill says the property market is a reflection of the economy, and as Sydney is a centre for foreign banks, the high-tech industry and companies servicing Asia

the current activity will no doubt result in a long-term developments.

“Look at the Sydney market and you will see just about every business that is experienc-ing substantial growth is based in Sydney,” he says.

“Whether it be in the dot.com corridor or whatever industry you look at, it is all based in Sydney. It is very encouraging for the Sydney market and with the

Olympic Games looming it will really showcase the city to billions of people.”

The high-tech business sector of Sydney and Australia nationwide has quickly learned of offshore investment news and opportunities, leaving fund manager laurels barely sat upon.

Macquarie Bank’s head of property, Rod Cornish says a number of financial institutions are in the process of setting up managed funds overseas in Asia, the US and Europe to stay ahead of globalisation race.

Cornish says there are currently a handful of Australian fund managers offering invest-ment vehicles underwritten by international real estate assets. He

says investors of these funds are searching for higher returns and greater levels of diversi-fication than is currently available in Australia.

“A hand full of fund managers are setting up Asian funds. We at Macquarie are setting up a fund called AsiaWide, a property fund which stretches across all

classes,” he says.

“We think there is a push for globalisation with people locating to different parts of the world, particularly in Asia. We can see the push to

globalisation and property — similarly as we saw the global equity market form.”

According to Cornish a report released by Macquarie in February Macquarie AsiaWide Properties states the Asia-Pacific markets will provide the highest returns over the next 18 months. The prime real estate and investment market areas include Singapore, Hong Kong, China and South Korea.

The report says although there is a break in the Asian market it is important that investors analyse each market separately as Asian real estate is not considered one market.

Recent industry figures from February this year show capital values ranging from 30 per cent to a massive 75 per cent, giving investors a strong indication of

the Asian markets progressive growth.