Sydney and Melbourne continue to draw capital
Sydney and Melbourne have been voted the top two investment destinations in the Asia Pacific region with 84% of institutional investors saying they plan to deploy capital to the office sector in those cities within the next two years.
Tokyo remained the third most attractive market in the region for real estate investors while China’s Tier 1 cities moved up one place to take the fourth spot from Osaka which dropped to the fifth in this year’s survey published by the Asian Association for Investors for Non-Listed Real Estate Vehicles (ANREV), the European Association for Investors in Non-listed Real Estate Vehicles (INREV) and the Pension Real Estate Association (PREA) in the US.
Source ANREV
The responses came despite both Australian and global property reporting losses in 2020. According to FE Analytics, over the period of 12 months to 30 November, 2020 the Australian listed property sector lost 7.54% while the global property sector saw a loss of 10.80%.
Only two funds in these sectors remained in the positive territory which were Freehold Australian Property which returned 0.49% over this time period and the CF Property Capital Pty Ltd Chiodo Diversified Property Development Strategy which returned 0.31%.
Performance of the Australian listed property sector versus global property sector for 12 months to 30 November 2020
Australian real estate was also expected to see much stronger interest from North American and European investors this year, in particular, with 100% and 83% of North American investors naming Sydney and Melbourne as their top investment location in 2021 compared with 60% and 40% respectively last year.
Meanwhile the proportion of respondents from Europe naming Sydney and Melbourne as among their chosen destination rose by a smaller amount from 75% to 82% and 66.7% to 73%, respectively.
Despite of the devastating impact of the pandemic in 2020, in the eyes of the international investors the office sector remained the preferred sector and ahead of industrial/logistics and residential.
However, the residential sector emerged as the third most sought-after by investors sector only for the second time in a row as 68% of the survey’s respondents indicated to continue to direct their capital there.
Amélie Delaunay, director of research and professional standards at ANREV, said that in spite of the widespread disruption and change brought about by COVID-19, the pandemic had failed to make any real dent in institutional investors’ appetite for real estate investment in Asia Pacific and investors still had large amounts of real estate capital to deploy to the region.
“Real estate investing is for the long term, with the survey clearly showing that the pandemic has not knocked the underlying fundamentals underpinning the growth of Asia Pacific’s real estate market, nor the important diversification role the region plays in portfolios,” she added.
AUTHOR
Oksana Patron
Recommended for you
Tribeca Investment Partners has made a distribution hire from Australian Ethical in a newly-created role focused on the national intermediary market.
Asset managers may be urged to diversify their product ranges, but investment executives have warned any M&A deal should avoid simply filling gaps and instead consider long-term value creation.
Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equity firm.
Fund managers are entering 2025 with the most bullish sentiment since August 2021 and record high allocations to US equities, thanks to the incoming Trump administration.
