Real Capital Analytics / February 22nd, 2021
Sydney, February 22, 2021 – Transactions of commercial real estate in Australia tumbled by almost a half in 2020 to the lowest levels of activity in eight years as the pandemic threw up hurdles to dealmaking and cast a shadow on demand for retail and office properties, the inaugural Australia Capital Trends report from Real Capital Analytics reveals.
Coming off a record 2019, investment into income-producing property in Australia fell 44% to A$27.6 billion. In the fourth quarter activity dropped 54% compared with a year prior, to A$8.8 billion. Among the core property types, annual activity fell the most in the office sector, down 59%, and retail sector, down 56%.
There were some bright spots in an otherwise torrid year. Investment in industrial properties inched up due to increased interest in data center and logistics facilities, mirroring a trend seen across major Asia Pacific markets. A few alternative sectors, notably student housing and medical offices, surged ahead, while demand for pubs and convenience retail held up better than the broader market.
David Green-Morgan, RCA’s Managing Director for Asia Pacific, said: “With Australia’s success in containing Covid-19 we could have hoped for some improvement in deal activity through the year but the fourth quarter was especially weak. There were some bright spots in the market but overall it was a disappointing year for Australia.”
It was a mixed picture for capital flows into Australia. Singaporean investors largely kept pace with their spending in previous years, despite the challenges of executing deals during the pandemic. European investors upped their activity, with the A$2.1 billion acquisition of the Urbanest student housing portfolio a standout deal. Investment from U.S. and Canadian players all but evaporated in 2020.
Benjamin Chow, RCA’s Analytics Manager for Asia Pacific, said: “Not only have U.S. investors dialed down their acquisitions in Australia, but they have been actively selling. German investors, on the other hand, have been picking up office, logistics and student housing properties.”
Note to editors:
Real Capital Analytics (RCA) launched Australia Capital Trends in February 2021, adding to its suite of industry-renowned Capital Trends reports. Australia Capital Trends is a quarterly report covering deal pricing and volume data for the major property types, cross-border and domestic capital flows, and rankings of top deals and players.
After more than a decade of providing market intelligence to investment professionals in Australia, RCA in 2021 will launch an enhanced localized product. The expanded domestic offering will allow Australian clients vastly greater access to a more significant number of transactional records, deeper data granularity, and Australia-wide construction data. RCA opened its Sydney office in early 2021.
Real Capital Analytics is the authority on the deals, players and the trends that drive the commercial real estate investment markets. Covering all markets globally, RCA delivers timely and reliable data with unique insight into market participants, pricing and capital flows. The most active investors, lenders and advisors depend on RCA’s market intelligence to formulate strategy and to source, underwrite and execute deals. An industry pioneer since 2000, RCA has offices in New York, San Jose, London, Amsterdam, Stockholm, Singapore, and Sydney. For more information, visit www.rcanalytics.com.
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Lee Jing Hong
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Siobhan Crise, Managing Editor, Real Capital Analytics