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Research - APRIL 13, 2018

Melbourne beats Sydney as the top Australian city for investment

by Andrea Zander

Investor appetite for Asia Pacific real estate remains robust, according to CBRE’s 2018 Asia Pacific Investor Intention Survey.

An overwhelming 92 percent of respondents indicate that their investment activity in 2018 will be the same or greater compared to 2017.

As investors shift towards core-plus and value-added strategies, their focus is broadening away from the traditionally preferred markets of Shanghai, Sydney and Tokyo. Several cities are attracting attention, led by Singapore, Melbourne, Brisbane and regional cities in China and Japan.

Japan remains the top destination for investment, with Tokyo ranking as the most preferred city. Investors are also displaying strong interest in regional cities such as Osaka and Fukuoka.

Melbourne eclipsed Sydney as the most attractive city in Australia, a result due to its stronger rental growth supported by tight vacancy. Brisbane received stronger interest from cross-border investors considering counter-cyclical plays, with office rents recently bottoming-out after a five-year correction and expected to recover over the next two years.

Shanghai continues to be the most desired market in China, with transaction volume rising to a historical high in 2017. Tier II cities with strong fundamentals, such as Hangzhou, Nanjing and Chengdu, are also gaining more traction from investors.

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