This follows almost $1.5 billion in major deals negotiated across the office, industrial and retail market in one week alone and a pipeline of circa $2 billion expected in December.  Offshore activity has been strongest from Singapore, Germany and China.

The final months of 2020 have seen strong capital markets activity for the Australian commercial property market, with almost $1.5 billion in deal flow negotiated in one week.

The large deal activity in the week of 16 November now brings total sales volumes for the entire commercial market in Australia to $13.63 billion.  This compares to $36 billion in 2019, when Australian commercial volumes reached an all-time record high.

Offshore groups have accounted for around 44% of total investment volumes across all sectors (office, retail and industrial) year-to-date in 2020, with interest strongest from Singapore, Germany and China.

JLL estimates the pipeline going into the final month of the year is estimated at circa $2 billion.

JLL’s Head of Capital Markets – Australia, Fergal G Harris said, “The most active offshore groups in 2020 have been from Singapore ($2.28 billion), Germany ($1.30 billion) and China ($1.29 billion) which have made up the vast majority of offshore investment activity.

“International capital invested year-to-date typically has a track record of investing in real estate in metropolitan Australia.  Travel restrictions has no doubt played a large part in this.  However we are increasingly fielding inquiries from new sources of capital keen to understand the Australian market opportunities and the multiple entry ways in – be that in capital cities or metropolitan areas. 2021 will see another year of strong foreign capital participation.

“Australian REITs and private investors/companies continue to be amongst the most active domestic groups for 2020.

“JLL jointly transacted the biggest office transaction for 2020 on behalf of Dexus, for a 50% interest in Grosvenor Place in Sydney for $925 million.  This conditional exchange of contracts is a big vote of confidence from foreign investors in the Australian market and demonstrates the strength and attractiveness of our capital markets.

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Grosvenor Place Sydney Australia 

“JLL has been involved in not only the biggest office deal for 2020, but also the largest retail deal with the sale of the Bunnings warehouse portfolio across Australia,” said Mr Harris.

Foreign investment volumes across the office, retail and industrial sectors in 2020 so far have totalled $5.97 billion, which is 44% of total transaction activity.  This compares to foreign investment volumes across the office, retail and industrial sectors in 2019 totalling $12.09 billion, which was 34% of total transaction activity.

JLL Research figures show national office investment markets recorded $7.21 billion of sales (above $5m) over 2020, year-to-date.  This compares to $24.2 billion of sales recorded over the full calendar year in 2019.

For all sectors of commercial property (office, retail and industrial), transaction volumes year-to-date over 2020 are at $13.6 billion, compared to a record $36 billion for the calendar year in 2019.

In the week of 16 November, across several deals and several days, JLL’s Capital Markets team brokered almost $1.5 billion of property:

• JLL Office Investments: $925 million – 50% interest in Grosvenor Place, Sydney. On behalf of Dexus, the conditional exchange of contracts to sell a 50% interest in this premium grade tower. (joint appointment) The sale is subject to FIRB approval.
• JLL Retail Investments: $353 million – Australia & New Zealand Bunnings Warehouse portfolio of six assets located across metropolitan markets. This is the largest retail transaction of 2020 to date.
• JLL Industrial & Logistics Capital Markets: $171.1 million - Eastern Seaboard Cold Storage Portfolio sold to Centuria Industrial REIT. The portfolio comprises three warehouses across Sydney, Brisbane and Melbourne.

According to JLL Research, investors returned to Asia Pacific commercial real estate markets in greater numbers in the third quarter.  Volumes rebounded 35% quarter-on-quarter, and while overall third quarter numbers were down 19% year-on-year, transactional activity accelerated across several major markets as investors deployed capital with more confidence than at any other period of 2020.

"The first major signs of a resumption of investment activity emerged in the third quarter, with investment volumes showing meaningful improvement in China, Korea, and Japan. While uncertainty will remain for the foreseeable future, we believe that low transactional activity has bottomed out, and our optimism for the fourth quarter continues to grow," says Stuart Crow, CEO, Capital Markets, Asia Pacific, JLL.

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Stuart Crow, CEO, Capital Markets, Asia Pacific, JLL