The resurgent economy in Australia has lured many foreign commercial property investors. Many have bet the rebound will underpin the competitiveness of the market amid the surging local currency.
Two German firms, asset manager Commerz Real and property fund manager Deka Immobilien, are considering Australia as an ideal investment location. Carlyle Group, a private equity firm in the United States and the National Pension Service in South Korea are reportedly in discussion to purchase a Sydney office building for A$700 million (S$896 million).
According to Thomas Schmengler, managing director of Deka Immobilien, the strong fundamentals of Australian property and the fact that the economic downturn of the nation did not turn into a recession, had attracted the unit of DekaBank. “Our Australian investments are fully hedged on the currency side, thus the exchange rate fluctuations do not influence our investment strategy,” said Mr. Schmengler.
The volume of Aussie commercial real estate sales surged 1.2 percent to A$2.28 billion from Q2 to Q3, with foreign investors accounting for 22 percent of the sales from 16 percent, said DTZ Research. The trend is likely to continue as offshore companies are set to finalize the acquisitions.
According to Hans-Joachim Kuhl, head of Commerz Real’s real estate acquisition, talks were “well underway for our closed-end real estate funds segment (in Australia), where commitments have a far broader equity basis”.