Melbourne has surpassed Sydney as the preferred destination for Australian-based commercial property capital, reveals a new survey.
Of the Australian investors surveyed, 37 per cent said Melbourne was their preferred market, up from 20 per cent last year and ahead of Sydney at 30 per cent, shows CBRE’s annual Australian Investors Intentions survey.
Melbourne’s strong economic fundamentals driving rental growth was part of the reason it overtook Sydney as the preferred destination for domestic capital, CBRE’s Ben Martin-Henry said.
While investors indicated that both buying and selling expectations were higher for 2019.
“With 35 per cent of investors surveyed indicating that they plan on increasing their divestment activities and 32 per cent indicating they will be more acquisitive,” Martin-Henry said.
Globally, the survey shows investors intending to purchase outside their home market placed Australia in third spot, behind the US and the UK, for preferred markets.
China ranked fourth, Japan fifth and Germany came in at number six.
Industrial and logistics overtook office investment as the most desirable sector for Australian investors this year.
Director of Capital Markets Mark Coster said this was in line with the global trend, with the industrial and logistics sector the most desirable for the past three years.
In good news for Perth, the Western Australian capital made a comeback on the Australian investor radar.
The survey shows 10 per cent of investors nominated the city as their preferred investment location, this portion up from only 2 per cent last year, due to “the higher yields achievable relative to other markets,” the report said.
The build-to-rent residential sector climbed to third place, ahead of retail, as investors continue to investigate opportunities in the nascent Australian build-to-rent asset class.
Of those surveyed, 75 per cent cited “high asset pricing”, while 31 per cent cited “potential global economic shock” as highest on the list of obstacles to invest in property, being the biggest potential threats to the market.