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News release

Sydney

Sydney ranked 4th in the world as one of the cities that attract the most real estate investment relative to their size

Three Australian cities in Top 20 list of 300 cities monitored by JLL’s Real Estate Investment Intensity Index 


A JLL Research Index which highlights cities around the world that are punching above their weight in terms of attracting real estate investment has listed Sydney in fourth place in the worldwide rankings.

3 Australian cities made it into the Top 20, with Melbourne coming in at number 10 and Brisbane at number 19.  London was Number 1 in JLL’s Intensity Index March 2016, which measures the volume of direct commercial real estate investment in a city relative to the city’s economic size. 

‘New World Cities’, including Melbourne and Brisbane, account for 16 of the Top 20 in JLL’s Investment Intensity Index. They are typically small to medium-sized cities with transparent, open real estate markets and favourable infrastructure and liveability platforms. They are building dynamic economies and real estate markets through innovation and demonstrate an ability to transform and adapt to a constantly changing socio-economic landscape.

‘Established World Cities’ that featured in the Top 20 included London, Sydney, New York and Paris.  Investor demand for prime assets in the world’s most globalised urban economies continues to be strong.

Jeremy Kelly, director, Global Research Programmes at JLL said: “The world’s most globalised metropolitan economies continue to account for a significant portion of global transactions, with the top 10 cities for transaction volumes accounting for nearly 30 percent of global investment over the last three years. However, over the past 10 years a core set of 32 New World Cities has steadily increased its share of global real estate investment volumes, rising from 10 percent in 2006 to account for over 20 percent in 2015.”

Rob Sewell, Head of Office Investments - Australia, added: “Investors continue to see Australia, and in particular Sydney, as an attractive investment destination. This is particularly the case for offshore investors. In 2015, offshore investment volumes accounted for more than 40% of all commercial property transactions in Australia.

“The proportion of offshore investment in the office sector alone was even higher, where 54% of asset acquisitions (by value) were purchased by an offshore buyer. This is the highest level of annual foreign capital inflow ever recorded in the Australian office sector,” said Mr Sewell.

Sydney has been positively impacted by two major investment themes:
 
  1. greater allocation of capital to real estate by sovereign wealth funds, pension funds, insurance firms, and other investors, and; 
  2. portfolio shifts towards the Asia Pacific region by a number of key investor groups.
Mr Sewell said, “There are a multitude of reasons why Australia, and Sydney in particular, attract both offshore and domestic capital. Improving market fundamentals, especially in Sydney, are supportive of robust investment market activity. 

“Positive take-up across metropolitan Sydney, combined with robust NSW economic growth, and Sydney’s status as key gateway city into the Asia Pacific region, saw investment capital concentrated in NSW. Last year, over 50% of national office transactions volumes by value occurred across the metropolitan Sydney office markets.

“Another key factor that sets Sydney, and Australia, apart and which should not be overlooked is the very high level of transparency within the commercial property market. 

“In JLL’s bi-annual Global Real Estate Transparency Index, the benchmark report in global transparency levels in real estate, Australia is consistently ranked in the top three of the world’s most transparent real estate markets. 

“In the last survey in 2014, Australia was ranked the third most transparent market in the world,” said Mr Sewell.

Investors being attracted by market fundamentals and active tech sectors

The JLL Report says factors attracting investors include improving market fundamentals and active technology sectors, while they are also being drawn to attributes relating to high levels of transparency, liveability and sustainability.

Michael Fenton, JLL’s Managing Director, New South Wales said, “Sydney’s technology sector is as an asset for investment in commercial real estate markets.

“One area of JLL’s City Momentum Index, a ranking that measures the speed of change of a city’s economy and real estate market, examines innovation using a number of long-term fundamentals like education and high-tech startups.  Sydney performed well on this sub-index, being ranked 11th out of 120 cities in the world and right up there with San Francisco, Hong Kong and Paris.

“JLL is also tracking major world infrastructure projects, and many of the cities at the top of this innovation index are using infrastructure and city planning to increase their momentum.

“Sydney was well placed for the economic cycle with the range of major projects underway.

“For Sydney, major infrastructure projects like Barangaroo, which is creating a new waterfront district complete with office space, residential accommodation and a new public park will significantly add to Sydney’s appeal and liveability as a city.

“Similarly, further waterfront development at Darling Harbour to redevelop entertainment and leisure and the comprehensive plan by the government to develop former industrial land, including White Bay Power Station through the Bays Precinct Transformation will be another infrastructure asset that Sydney will boast.

“The Sydney Metro Northwest project currently under construction is another piece of infrastructure that will connect people to the city,” said Mr Fenton.

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About New World Cities and JLL’s Investment Intensity Index:
‘New World Cities’ account for 16 of the Top 20 in JLL’s Investment Intensity Index. They are typically small to medium-sized cities with transparent, open real estate markets and favourable infrastructure and liveability platforms. They are building dynamic economies and real estate markets through innovation and demonstrate an ability to transform and adapt to a constantly changing socio-economic landscape. JLL’s Investment Intensity Index covers over 300 cities around the world, and compares the volume of direct real estate investment in a city over a three-year period relative to the city’s current economic size.  The Index provides a measure of real estate market liquidity, as well as a useful barometer of a city’s overall ‘health’, highlighting cities that are punching above their weight in terms of attracting real estate investment.