Investa Property Group, a Morgan Stanley owned commercial real estate firm, declared that it will be investing around $523 million for office purchases across Australia. The announcement follows the resurgent growth of commercial real estate in the country.
According to Bloomberg, Investa forecasts that the value of commercial properties will rise in the near future on increased foreign investment in the country. This is one of the major reasons for the company's huge buying plans.
Campbell Hanan, head of Investa, said in an interview with Bloomberg that the company's real estate investment trust, Investa Commercial Property Fund, had received $90.4 million from a Swedish Pension Fund and around $52 million from an Australian pension fund. These large investments from big players are an affirmation of the confidence that businessmen have in the country's commercial real estate sector, added Hanan.
"We're constantly talking to people about opportunities to buy buildings that are not listed on the market to deploy the capital the funds raise. We're being inundated with inquiries, mostly from offshore. Over the next 12 months, we'll buy about A$250 million to A$500 million of properties," Scott MacDonald, chief executive of Investa, said in an interview with Businessweek.
Investa Property Group is the largest office owning firm of Australia. Morgan Stanley had taken over the company in 2007 for around $3.9 billion. The acquisition came when commercial real estate values were the highest in 2007. After the recession hit, prices dwindled. However, the mining boom buoyed the country.
Australian commercial markets have been doing reasonably well in the wake of the recovery. In a recent report compiled by Jones Lang La Salle, it was revealed that nearly half (45 percent) of the real estate investments in the Asia Pacific region have been flowing into the country's commercial property markets followed by Japan and China.
Experts predict that foreign investments in the country will be sustained throughout 2013 as the office and retail yields are at par with long term profit forecasts. This is making investment prospects even more appealing to the offshore businessmen.
"They are investing in the region because of the long-term growth prospects with a big shift to Australia," David Rees, head of research and consulting at Jones Lang la Salle, said in the report.
