CHINA CONTINUES TO COLLECT AUSSIE PROPERTY ASSETS

CHINESE coin continues to dominate Australia's offshore real estate investment market, accounting for almost half of the total capital transacted during 2016.

Last year around US$28.2 billion flowed in from Chinese investors who were seeking a slice of Aussie property, often in the form of Melbourne and Sydney's CBD office assets.

Michael Andrews, director of institutional & international investments NSW for CBRE, says China continues to be a driving force in the market in 2017, both inside and outside the CBD hotspots.

"Chinese investors remain active in deploying capital offshore into the Australian market, with the majority of this targeting residential development sites and/or income producing assets that are capable of being converted to residential," says Andrews.

"There is a very strong appetite from global capital for quality office investments. The change we are seeing however is in their growing acceptance of markets outside of the CBD core such as North Sydney, Parramatta and Macquarie Park in New South Wales, and St Kilda Road in Melbourne."

Andrews says that while China is certainly the most significant player when it comes to large-scale offshore transactions, it isn't alone.

"Offshore capital flows continue to strengthen in the Australian market, with new and increasing mandates from existing investors and also emerging capital from markets such as Japan that we haven't seen for some time," says Andrews.

The latest figures released by CBRE reveal that while Asia's interest in pacific markets has risen, the United States is still its favourite investing ground.

Andrews says that Asian investors are more commonly seeking to diversify their portfolios as a greater demand for niche assets emerges.

"The shift towards counter cyclical investment is gaining some momentum, with Asian investors showing more willingness to invest in secondary locations in addition to alternative sectors outside of the traditional office assets such as student housing and healthcare," he says.

CBRE expects that the Chinese appetite for global real estate will remain solid despite increased scrutiny on cross-border capital flows and rigorous checks by government.