Pandemic drives slowdown in private off-shore Asian investors, whist Domestic Asian investors remain active
The COVID-19 pandemic has driven a fall in private off-shore Asian investors, however Australia’s commercial property markets can look forward to new wave of investment once travel restrictions are lifted, according to national commercial agency Stonebridge Property Group’s newly launched Asia Practice team.
Data from the team’s Directors Kevin Tong and Chao Zhang, who have completed transactions in excess of $3 billion to Asian buyers over the last five years, reveals a dramatic decline in the number of private off-shore Asian investors in 2020 compared to 2019, whilst domestic Asian investors have significantly increased.
“This fall is directly related to travel restrictions. Communications with our extensive Asian community networks, which we have built up over the last 10 years, reveals a hungry off-shore cohort eagerly awaiting any lift in travel restrictions which will allow them to invest in Australian stock.
“Hong Kong is a great example of cashed-up Asian investors wanting to invest in Australia. We witnessed a hive of activity pre-COVID-19 with several key transactions early in 2020 to Hong Kong based investors – investors who are now essentially sitting on the sidelines waiting for the borders to open up.
“ The only hurdle we see for a high volume of sales activity to this buyer profile is a lack of available stock. In the instance that supply levels across all sectors does not normalise in 2021, we anticipate the unexpected price escalation as a result.,’’ Mr Tong said.
He said the low cost of debt had been a key driver in the re-emergence of domestic Asian investors.
Below is a table analyzing transactions to Asian investors in Commercial Property (Retail, Commercial & Industrial)
|Asian investment||International Asian investors (REITs and Funds)||International Asian investors (Private)||Domestic Asian investors*|
Source: Stonebridge Property Group Asia Practice team.
*Groups that have migrated to Australia within the last 10 years.
Mr Zhang said the Asia Practice team – one of the most experienced Asia-dedicated commercial agency teams nationally – was excited about the launch of the national business.
“Having witnessed the growth of the Asian buyer profile in commercial property first hand we believe this national platform will provide the most comprehensive Asia specific service available.
“Over the last 10 years we’ve established firm, long lasting, and mutually beneficial relationships within the Asian communities both in Australia and off-shore. In doing so we have built an enviable network and first rate system that provides vendors with the opportunity to expose their properties to the widest possible pool of Asian investors locally and offshore,’’ Mr Zhang said.
He said the maturity of the Asia buyer profile over the years had seen their requirements become much more asset specific.
“Once an almost purely passive investment cohort, Asian buyers have, particularly over the last few years, broadened their investment horizons to include assets, for example, providing long-term site development potential as well as attractive yields.
“Our response has been to develop specialised agents in each sector including retail, development sites, and other markets,” added Mr. Tong.
The Asia Practice launch follows the recent launch of Stonebridge Property Group’s Melbourne team headed by Justin Dowers and Julian White.
Stonebridge was formed in Sydney in 2008 by directors Jonathan Fox, Carl Molony, Phil Gartland and Lincoln Blackledge.
The group quickly established themselves as a major force in the sale of shopping centres and development sites in Australia and New Zealand. Recent sales include last month’s $150 million sale of Glenmore Park Town Centre to HomeCo, and the $46 million sale of a large-format retail centre at 300 Parramatta Road, Auburn in March.