Foreign buyers return to office property investment

Foreign buyers and investment funds returned to the office property sector contributing US$481 million worth of investment or about 25 percent of total transactions for the year.

In Victoria, an estimated US$2 billion worth of office property was by November, an 80 percent increase compared to the same period last year.

Jones Lang LaSalle.Victoria managing director, Andrew Wood, told BusinessDay that in 2009 buyers were counter-cyclical private investors in addition to large acquisitions by offshore groups. ''As the market recovery gained traction in late 2009 and 2010, we recorded increased activity from offshore groups, superannuation funds and Australian real estate investment trusts,'' he said.

Some of the largest deals for the year includes 485 La Trobe Street sold to CLSA Capital Partners for US$140.1 million; South Wharf by Deka purchased for US$115.5 million and 737 Bourke Street sold to RREEF Asia Pacific for US$115 million. He added: ''Offshore investors are attracted to Australia by the strength of the domestic economy, the transparency of the real estate markets and positive supply and demand fundamentals in the Melbourne CBD.''

Investors are looking into the Australian commercial property market as a safer way to invest the China market with less risk and more transparency. In Melbourne, prime vacancy rates in its central business district came in at 4.3 percent, the lowest rate compared to other CBD office markets in the country.

Melbourne vacancy rates also ranked lower compared to other major cities in the region namely Hong Kong at 5.5 percent, Singapore at 6.5 percent, Tokyo at 6.7 percent, London at 7.1 percent, Shanghai at 11.5 percent, New York at 12.1 percent and Chicago at 19.9 percent.