Commercial property transaction activity reached $15.2 billion during the first half of 2022, down by more than a third compared to the same period last year, according to CBRE.  

Office, retail, industrial and hotel deals moderated in H1 2022 following record capital flows of $23.8 billion during the same time last year. 

One of the key drivers was lower industrial and logistics transaction volumes during the period, dropping from $10.6 billion to $3.5 billion. 

In early 2021, there were major industrial deals including ESR Australia’s record-breaking $3.8 billion purchase of the Milestone logistics property portfolio from Blackstone; the sale of a 90% stake in the Fife industrial and logistics portfolio to PGIM Real Estate and Manulife for $850 million; and the circa $1.67 billion Moorebank Logistics Park sale. 

“The decline in the overall sales volume in the first half is not a reflection of the market or investor interest,” Mark Coster, CBRE’s Head of Capital Markets, Pacific, said.  

“We saw significant trading in 2021 so it’s natural to expect market activity to decline year on year.  

“We continue to see strong investor interest, albeit at pricing reflective of the changing dynamics in the market around rental growth, differing risks across the asset classes and the cost of debt, which has moved upwards over the past quarter.” 

Office deals reached about $6.3 billion, followed by retail transactions at $4.7 billion. 

Offshore investment accounted for 26% of transactions volumes in H1 2022, down from 35% in the same period last year. 

CBRE’s Australian Head of Capital Markets Research Tom Broderick said Hong Kong investors had led investment activity, accounting for about $1.3 billion of acquisitions in 2022.  

“Investors from Hong Kong appear to be diversifying their portfolios with Australia being a key destination,” Broderick said.  

“In fact, since 2020, Australia has been the 2nd most popular destination globally, behind only Mainland China, for Hong Kong outbound capital investing in commercial real estate.” 

The other top sources of offshore capital into Australia were Singapore at $1.2 billion, the US at $500 million, Germany with $460 million and Korea at $320 million.