Melbourne keeps Asian investor confidence
Despite the impact of COVID-19 on the economy and investment markets, the Melbourne commercial property market has successfully kept its status as an “investment safe haven” among foreign investors, a new report has found.
According to the Fitzroys 2021 Outlook report, the relative success of Australia in battling the pandemic has reaffirmed the confidence of offshore and locally based Asian investors.
“Australia has been in a relatively strong position throughout the pandemic compared to many other countries, and offers potential for a faster recovery. This has enhanced the safe haven status that initially attracted so many Asian investors,” Fitzroy senior manager – agency Shawn Luo said in a statement.
“Adding to this, Asian investors are already more comfortable with lower property returns, making the investment yields here more appealing.”
Mr Luo said that while inquiries have slightly declined over the past year due to border lockdowns and travel restrictions, demand from overseas buyers has remained strong.
Even the restrictions from the Foreign Investment Review Board, which may impede on some type of sales to Asian buyers, as well as stricter lending policies, have failed to dampen the appeal of Melbourne real estate among Asian buyers, he continued.
Moving forward into 2021, Mr Luo expects inquiry levels to rise back up in Melbourne as travel restrictions ease and borders open.
Overseas buyers are expected to have a reinvigorated interest in Melbourne’s commercial properties, particularly across retail, shopping centre, office, childcare, service station and development site assets, the senior manager noted.
The retained confidence in the market could also mean that they may diversify into other sectors which proved to have thrived amid the COVID-stricken year.
“The attention of overseas buyers would be even more diversified in 2021, with more buyers paying attention to industrial and agricultural assets, both sectors that have weathered the pandemic period strongly,” Mr Luo said.
Ultimately, he expressed the belief that the long-term fundamentals that helped establish Melbourne’s reputation as an “investment safe haven” in the first place will stand as the main drivers of overseas demand as the market recovers from the impacts of the pandemic.
“The major drivers of demand from Asian buyers in Melbourne commercial property at the moment are those that have underpinned demand for some time: long-term steady population growth, a stable political situation, freehold assets, and reasonable yields,” the senior manager concluded.
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