Foreign investment in Australian property falls to $10.52bn amid global headwinds

Foreign investment in Australian property dropped to $10.52 billion in FY24, down from $15 billion the previous year, as global economic challenges impacted cross-border capital flows.

New research from M3 Property revealed Japan has re-emerged as a major investor alongside traditional sources like the United States and China.

The United States maintained its position as the largest investor with $3.3 billion, followed by Japan ($2.43 billion), Singapore ($2.12 billion), China including Hong Kong ($1.6 billion) and Canada ($580 million).

M3 Property Queensland Managing Director Michael Coverdale said the market remained solid despite facing headwinds.

“The year ending June 2024 was notable for the changes in the mix of overseas investment sources into Australia. While our real estate market remains solid, it’s not as robust when compared with previous financial years,” Coverdale said.

Office properties attracted the strongest interest with $4.1 billion invested across 18 sales to investors from Japan, Singapore, Hong Kong, Malaysia and the USA.

Industrial assets recorded the second-highest transaction volume, with acquisition values nearly 50% above disposal levels.

Development sites drew $1.3 billion across 26 sales, while retail assets saw lower demand compared to office and industrial properties.

Coverdale predicted foreign investment would increase in FY25 due to improving conditions.

“All signs point to the debt and investment markets changing from a period of volatility to stability, and even growth, in a few of our core investment markets,” he said.

Several major foreign investors have already made significant office purchases in Sydney and Melbourne this financial year, including German-based Deka, Singapore-based Keppel and SingLand, and Hong Kong-based PAG.

Japanese investors showed renewed interest in the Australian market after several years of inactivity, particularly in the office sector, with $2.33 billion in net investments.