Commercial Property Demand Surging Through the Roof across Australia

New Australian property investment records are being set as optimal property market conditions drive surging demand in commercial real estate, making Sydney the third most desired city for global capital investment.

In the 2014/2015 fiscal year, commercial property investment leapt by 19% year-on-year up to a whopping $28.88 billion according to Collier’s International Australian Investment Review.

Why is Demand off the Hook?

"The low interest rate environment, the falling Australian dollar and our stable economy have combined to create optimum conditions for Australian commercial property”, says John Marasco, Managing Director of Colliers International’s Capital Markets and Investment Services.

The strong commercial real estate market is not only good for foreign investors, but also locals.

"The strong performance of the sector in recent years and the potential for continuing growth have made more offshore investors consider the Australian market for the first time. At the same time, conditions for domestic investors have also been positive, so together demand for commercial property assets is at an all-time high”, observes Mr Marasco.

Sydney is the 3rd Most Coveted Destination for Global Capital Investment World-Wide

#1 London

#2 Manhattan

#3 Sydney (demand for commercial property in Sydney is strongest compared to all other Australian cities)

#4 Shanghai

#5 Paris

Sectors Showing Most Growth

1. The most growth was seen in the industrial property sector. Increased demand in transport and logistics due to limited new supply helped grow the industrial sector by 56%, hitting $6.45 billion year-on-year over 2014/2015.

Foreign investors are pouring the most capital into the Australian industrial real estate market, with $2.63 billion in property purchases, making up for 41% of total transactions within the sector.

2. Retail property is doing well too and is showing a lot of promise, trailing just behind the industrial real estate sector. Retail property investment grew by 24% year-on-year over 2014/2015. Assets totalling $7.541 billion were traded.

3. Office property transactions comes in third spot and is heavily driven by Hong Kong and mainland Chinese investors. These transactions reached $15 billion in value (growing by 7%) over the 2014/2015 fiscal year.

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