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Autumn brings positive change

Property Markets / Outlook


Jul 02 2018

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The first half of the year has allayed fears that a dramatic decline in buyer activity is on the cards and the market is set for a more subdued phase. After a relatively quiet start to the year, activity in the second quarter picked up substantially, proving that there is still considerable appetite for real estate assets in Australia.

Transaction volume for Q218 was $8.6b, up 88% on the $4.5b recorded in Q1 but down 18% on the corresponding period last year. The majority of Q2 transactions were in the office ($5.6b) and retail ($2.2b) sectors, with industrial and hotels coming in at $513m and $228m respectively.

Whilst the number of deals remained consistent – 118 in Q1 and 115 in Q2 – the average size soared 93% to $74.4m. This increase was driven predominantly by two large office transactions in Sydney, and three large shopping centre transactions in Melbourne.
Major transactions:
  • Blackstone’s sale of Westpac Place Sydney, to ISPT and Mirvac for $1,444m (50%)
  • Redefine’s sale of 100 Miller St North Sydney to Francis Choi for $812m (50%)
  • Pacific Group’s sale of Werribee Plaza Shopping Centre (50%) and Pacific Epping Shopping Centre (50%) to QIC for $1,000m
  • Dexus’s sale of Southgate Complex to Suntec and ARA for $578m  (50%)
Despite overall volumes holding up better than expected, activity is still below that of H1 2017 when $15.1b worth of assets were transacted compared to $13.1b in H1 2018. Partially explaining this is the mix of domestic versus offshore capital is shifting as local buyer activity accounted for approximately 79% ($10.4b) of total transaction volume; above the ~70% 5-year trend.
Offshore capital continues to enter the market but at a significantly reduced rate compared to previous years as overall volume declined 52% compared to H1 2017. The USA ($994m), Singapore ($626m) and Hong Kong ($560m) make up the lion’s share of offshore capital, whilst Chinese activity accounted for just $250m, down 81% from the $1.3b recorded in H117.

Read the full report here



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