The year 2016 is going to be a good year for the real estate industry in Melbourne and Sydney. A recent industry survey showed that the real estate market in both Australian cities are highly favored by property investors from all over the world.
Colliers International's 2016 Global Investor Outlook ranked Melbourne and Sydney as the second and third favored markets after London which remained as the market of first choice for 600 global investors. New York ranked as the fourth preferred market among investors which include private equity, property companies, REITS, funds, institutions and sovereign wealth funds.
Colliers Managing Director of Capital Markets and Investment Services John Morasco said that the result was consistent with 2015 figures which previously ranked Sydney third behind London and Manhattan in terms of investment volumes from foreign investors.
"Sydney is considered a global gateway city so for investors it ranks up there with New York, London, Singapore and the like in terms of being an attractive destination for investment," Morasco explained. He added that Melbourne is "not far behind" because the city is seen as a "good alternative" for Sydney.
Morasco added, "Tenant demand is improving in both Sydney and Melbourne, with rental growth now occuring and vacancy rates reducing. This only adds to the appeal of these markets."
Currently, domestic investors are dominating the real estate industry in both Australian cities. However, one-third of the total investment comes from foreign investors particularly from China. The Asian country is now the largest offshore investor in the Australian commercial property market.
Colliers National Research Head Nerida Conisbee said, "Right now, Australian investors prefer to invest locally and we see very little investment offshore. This is very different from the previous cycle where Australia was the third strongest investor globally."
She also pointed out that this situation is "beginning to change" as Australian superannuation firms are now starting to purchase real estate properties in other countries. "It is, however, unlikely that we will see the same levels of offshore investment as we saw previously," Conisbee related.
