SYDNEY • Australia attracted more than 25 per cent of Chinese capital invested in commercial property worldwide last quarter as investors facing volatile local markets seek refuge offshore, according to broker CBRE Group.
Chinese investors and developers funnelled US$4 billion (S$5.4 billion) into global commercial real estate in the first three months of this year, CBRE said in a report yesterday. That compared to US$10.5 billion for all of last year, of which Australia attracted 15 per cent, it said.
"Flows from China to Australia are complemented by growing numbers of Chinese tourists, students, settlers and an increased bilateral trade relationship," said Mr Stephen McNabb, CBRE's head of research in Australia.
While Australia has been batting above its weight, those factors are likely to underpin investment in the long term, the report said.
The flow of capital from China underscores the Reserve Bank of Australia's concerns about rising risks in commercial real estate.
In its semi-annual financial stability review, the central bank warned that the search for yield by offshore investors has driven local commercial property prices higher and yields lower.
"Leasing conditions have remained soft in many local markets, and oversupply is emerging in the Perth and Brisbane office markets," the bank said.
"These dynamics increase the vulnerability of the commercial property market to a price correction."
CBRE said development sites within a 5km radius of the central business districts of Sydney, Melbourne and Brisbane have been primary targets for investors .
Thirty-six of the 116 sites sold in these areas in the 12 months to April this year were acquired by Chinese investors: 16 in Sydney, 15 in Melbourne and five in Brisbane.