Commercial property sales in Australia reach $7.85 billion

Total commercial property sales in the country for the year amounted to $7.8 billion with more than $5 million each accounting for the office, retail and industrial sectors says a survey.

CBRE Executive Director, Global Research and Consulting, Kevin Stanley said that while the sales activity represented an improvement over 2009, it was still about 15 percent below the long term average annual turnover. “Sales activity is still to fully recover from the shocks of the Global Financial Crisis,” Stanley said

The biggest change in activity by sector was in the industrial market with $1.45 billion transacted, a strong 39 percent increase compared to 2009.

This represented 19 percent of all sales, about double the longer term average share of trading in industrial property. “A number of large industrial portfolios changed hands during the year, with significant interest coming from overseas investors,” Stanley added. “This is the first time foreign investors have weighed so heavily into the industrial sector, attracted by the low point in the pricing cycle, as well as the recent improvements in the leasing of new property as the economy improves.”

The office sector accounted for 49 percent of all sales, which is about average for this sector. In total, sales of office buildings dropped 6 percent to $3.85 billion, coming down from a higher-than-average share in the previous year.

“Better-than expected levels of employment and net absorption throughout 2010 is pointing to much better total returns for office in the year ahead, especially in Melbourne and Sydney,” Stanley said. “So 2010 was good timing to gain exposure to this sector.”

Trading in retail properties increased 19 percent over 2010 to reach $2.53 billion according to the CBRE survey. “Trading activity has been boosted by a number of the Centro properties finally reaching the market and transacting during 2010,” he added.