Overseas direct property grows four-fold

Overseas direct property grows four-fold

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Australian property investors spent over four times as much in overseas direct property investments last year, with growing interest in Western Europe, according to Jones Lang LaSalle.

According to their recent report, local investors poured $6.7 billion into overseas real estate in the first half of 2006, compared to $1.52 billion in the first half of 2005.

The US received almost half (46 per cent) of overseas investments, making Australians the third largest cross border investors in the US after global and Middle Eastern investors.

However, the fund flows are slowly shifting to European markets with Germany getting 19 per cent of the funds, or around $1.27 billion. The largest overseas acquisition was made by Record Realty, which bought seven office assets in Germany leased to Deutsche Telekom for a total $520 million.

Matthews said the rest of Western Europe enjoyed more than 14 per cent of inflows.

“Investments were also made in Belgium (6 per cent), the UK (3 per cent), Poland (2 per cent), the Netherlands (2 per cent) and France (1 per cent) over this time.”

In Asia, Hong Kong was the most popular choice accounting for 12 per cent of investor money. Macau, South Korea and New Zealand fund flows trailed behind at 4 per cent, 2 per cent and 2 per cent respectively.

John Talbot, the group’s head of capital markets, said that many investors are renewing their interest in the more established markets of Singapore and Japan. “While the US and Europe continue to represent the main focus for Aussie investors, increasingly Asia is coming onto the radar with core mature markets like Singapore and Japan of most interest.”

According to the report, property investors are buying more property overseas than they are selling with foreign purchases making up 60 per cent of total cross border transactions.

Source: Financial Standard