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News release

Sydney

Australian investment volumes holding up in the first half of the year despite the global economic uncertainty

Retail Investments the strongest performer but office markets prove resilient


SYDNEY, 3 JULY 2012 – Australian investment volumes have held up well for the first half of this year, despite the global bearish economic environment.

Jones Lang LaSalle analysis shows that Australian investment volumes for office, retail and industrial for 1H 2012 (as at 21 June) reached $4.6 billion, compared to $5.3 billion for the first half of 2011.

“Investment volumes have held up well this year despite the uncertain global environment,” said John Talbot, Managing Director, Investment & Advisory Group at Jones Lang LaSalle.

“Office markets have proved resilient despite the caution amongst investors and occupiers.  Sales volumes recorded for the first half of this year have almost reached the volumes recorded in the first half of 2011.”

$1.95 billion of office sales were recorded in 1H 2012 (as at 21 June) versus $2.47 billion in 1H 2011.

“The National Retail Investment market continues to be the strongest performer, recording higher volumes in the first half of this year compared to last.” 

$2.07 billion of retail sales were recorded in 1H 2012 (as at 21 June) versus $1.8 billion in 1H 2011.

Mr Talbot  said, “The biggest sale driving retail volumes in the first half of this year was the Perron Group acquiring a 50% ownership stake in three of Centro Retail Australia’s flagship regional shopping centres for $690.4 million.

This transaction, negotiated by Jones Lang LaSalle, was the largest agency negotiated real estate transaction of any asset class in Australia post the GFC.

Outlook for commercial property investment in the second half of 2012:

“In terms of the outlook, the reduction in the cost of debt for well rated groups is an interesting dynamic.  It is now accretive for listed vehicles to buy office assets in Australia.” 

“For wholesale funds, the reduction in the cost of debt has lowered the Weighted Average Cost of Capital and makes property investment attractive.”

“One of the hurdles in the market is the lack of prime-grade stock. A development cycle would create a supply of product, however there is limited development activity.”

“The space market conditions point towards development activity in Brisbane and Perth over the next 6-12 months. We expect that this will create fund-through opportunities,” said Mr Talbot.