02/05/2006 - 22:00

Australians spend $9b in US market

02/05/2006 - 22:00

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Australian investors spent $13.3 billion in overseas property markets last year, $8.9 billion of this in the US, making Australia the largest foreign buyer of US assets, according to a recent research paper.

Australian investors spent $13.3 billion in overseas property markets last year, $8.9 billion of this in the US, making Australia the largest foreign buyer of US assets, according to a recent research paper. 

Jones Lang LaSalle international director and Australian head of capital markets John Talbot said foreign investment last year more than doubled 2004 figures and investor appetites were quickly shifting to European markets.

The research paper, Global Real Estate Capital: More Markets, More Competition, shows Macquarie Office Trust undertook the largest transactions in the US, spending $1.2 billion for six assets.

Transactions include The Wells Fargo Centre in Denver for $US355 million, and California Place and the 777 Tower, both in Los Angeles, for $US325 million and $US308.9 million respectively.

Macquarie Countrywide Trust was the most prolific buyer, purchasing 97 assets with a combined value of $2.7 billion.

Babcock and Brown made the largest single purchase in the US last year, paying $US135 million for the Colonial Mall Bel Air in Mobile.

This buy is dwarfed by Australian investor Allco Commercial Trust, which made the largest purchase outside the US in Singapore, acquiring the Marsh and McLennan Centre for $US230.5 million.

Jones Lang LaSalle international capital group director Robert Orr said the greatest interest from Australian investors in Europe was currently focused on Germany, central and Eastern Europe, the Benelux countries (Belgium, the Netherlands and Luxembourg) and Scandinavia.

“One of the most attractive EU markets overall is Germany. It is a large and regionally diverse market which is currently entering a recovery phase, and it offers relatively higher yields compared to the traditional markets of UK, France and Spain,” Mr Orr said.

The research paper also suggests foreign investors are selling out of direct property in the Australian market, with a net outflow of $US1.6 billion.

Japan, UK, Malaysia and the Middle East were the most common foreign investors to sell their Australian assets in 2005.  Mr Talbot believes this outflow is largely due to investors taking advantage of buoyant market conditions, where they are achieving record prices for prime properties.

Mr Orr sugegsts Australian institutional investors undertake more reciprocal transactions or swaps while building global portfolios.

Australia will continue to attract investment interest as it is regarded as one of the most transparent property markets in the world, with about 55 percent of investment grade property owned by listed vehicles compared with less than 20 per cent in other major world markets, he said.

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