The Advantages of Australian Commercial Property

Why has Australia become such a particularly hot market for foreign investors?  

In my view the 3 key factors that have lead to this are:

1.  Foreign investors automatically look at the security of the place they are investing in, whether it is in Australia, Singapore, Canada or the US, what is common to each of them is that they have very stable legal systems, and very reliable property regulation.  That is inherently fundamentally important to all foreign investors.

2.  Most pronounced in the case of Australia, Australia has freehold title, with people able to acquire property in perpetuity, basically forever.  Purchasers are not acquiring property for a limited time, like a leasehold.  This is very valuable particularly to foreign investors who are used to leasehold title often being the norm.

3.  Australia offers a good return and the likelihood of capital appreciation. Australia has enviable returns, and has a history of, over many decades of providing significant capital growth to investors.  Compare this to almost half of the countries of the world which today have zero to negative interest rates and almost no prospects of capital growth in the short to medium term.

I believe in all of these 3 areas, Australia is very attractive to foreign investors and favorably comparable with other international countries.

The data collected by the Australian Shareholder Association shows that direct commercial property has typically performed very well in Australia over the last 30 years with an average annualised total return of just over 10% p.a.  In the commercial property market, A-grade properties including shopping centers, office buildings and hotels are the most attractive among foreign buyers for their historically proven economic returns.

It is these factors that have become increasingly important to foreign investors, and that has continued to drive Australian commercial property values up despite continued global economic slowdown.