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AUSTRALIAN AND NEW ZEALAND INVESTORS: PRIMARY INVESTMENT FOCUS (NEXT 12 MONTHS)
OFFICE CBD 39 RESIDENTIAL 36
% SHOPPING CENTERS 28 LAND 18 HIGH STREET RETAIL 15 DEBT 5
INDUSTRIAL AND LOGISTICS 36 DEVELOPMENTS 29 FEWER INVESTORS PLANNING TO TAKE MORE RISK
The number of investors willing to take on more risk has declined to 55%, from 64% last year. This is a lower proportion than many regions around the world including Asia, Canada and the US, but in line with the UK at 54%.
Since 2007, there has been a widening gap between prime and secondary yields across all asset classes in Australia. However, for some asset classes, in particular CBD office, this gap has narrowed. This has partly been due to some large Australian Real Estate Investment Trusts (A-REITS) moving into higher risk property to diversify their portfolios and target higher yields. However, strong offshore interest in secondary CBD office from Asian investors and residential and hotel conversion opportunities have also played a role.
In New Zealand, a shortage of good quality space in all sectors has driven vacancies to historic lows and fuelled prime grade rental increases in some locations and sectors. This has led to increased investment demand as buyers see good medium term rental growth prospects. All sectors are sought after, with offices the most popular, while location-wise most investors prefer the Auckland market.
2015 GLOBAL INVESTMENT SENTIMENT REPORT OFFICE SUBURBAN 23 OPPORTUNISTIC 17 HOTEL 10 INVESTMENT BEGINS AT HOME FOR ANZ INVESTORS
The majority of Australian and New Zealand investors continue to prefer to invest locally. Australia remains the most popular investment destination, followed by New Zealand. Other countries rarely feature. This is consistent with low levels of capital flows out of Australia. At present, the only investors going offshore with significant amounts of funds are the superannuation (pension) funds. This is in stark contrast to 2007 when most offshore activity was by A-REITS. At present, these continue to focus on local markets. However, it is likely that some will look to move offshore again in the next two years as access to stock continues to become more constrained.
Pacific investors prefer to invest is Sydney (58%), followed by Brisbane (44%) and then Melbourne (43%). Auckland is the strongest New Zealand destination at 30%. Such strong interest in Brisbane is a new trend and likely reflects the higher yields currently being achieved in this market. Offshore investors into the Australian market show similar preferences to Pacific investors, concentrating on the Australian Eastern Seaboard.
LEASEHOLDS 3
COLLIERS INTERNATIONAL
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