Commercial property deals in Australia rose 69% year-on-year to a record $70.8 billion in 2021, driven by major industrial and retail transactions.
According to Real Capital Analytics (RCA), industrial real estate deal volume surpassed the office asset class for the year.
While office and retail buildings dominated the list of biggest single asset transactions for the year, portfolio deals took the spotlight in 2021.
Major portfolio deals included Blackstone’s sale of the Milestone industrial portfolio for $3.763 and GIC’s disposal of its 49% stake in the Dexus Australian Logistics Trust for about $2.072 billion.
The retail sector ended the year on a high with several significant shopping centres changing hands.
Retail deal volume for the fourth quarter rose to $5.8 billion, bringing the annual spend in the sector to $17.2 billion, above the annual average seen in the five years before Covid struck.
“The retail sector has seen significant increases in acquisition volume in 2021 compared to previous years; but, overseas buyers have demonstrated limited interest,” said Benjamin Martin-Henry, RCA’s Head of Real Estate Research, Pacific.
“The near 140% increase in retail transactions is almost purely driven by domestic investors who appear to be warming to the sector once again.”
The top investment market in Australia last year was the Sydney office market again despite a slow start due to the uncertainty surrounding the future of offices.
Sydney office sales grew 48% on 2020 volumes, with overseas investors accounting for around 60% of the total, their highest share in over a decade.
The biggest Sydney office deal was Blackstone’s acquisition of a 50% interest in the Grosvenor Place office tower from Dexus and the Dexus Office Partnership for $925 million.
“Investors have shown a lot of faith in the Sydney office market with some significant transactions over the year,” said Martin-Henry.
“We also have another $2 billion worth of Sydney offices awaiting settlement, which is a promising sign.”
Globally, Australia was a top performer last year, with deal volumes doubling YOY, which was a similar increase to the US market.
Singapore was a standout performer, with deal volumes up over 170% YOY.
“The Australian market has bounced back significantly better than many of our global peers, particularly in the office and retail sector,” said David Green-Morgan, RCA’s Head of Real Estate Research, Asia Pacific.
“Australia is one of the very few major markets that saw retail volumes increase on pre-Covid averages.”
2021 in review
Australia’s biggest commercial property portfolio deals of 2021
Australia’s biggest retail property deals of 2021
