Australian commercial real estate investment reached $43.6 billion in 2022, only surpassed by $53.6 billion reported in the bumper 2021 calendar year, according to Cushman & Wakefield.
Office market deals reached $16.3 billion, followed by $10.1 billion for industrial and logistics and $9 billion for alternative and specialist markets such as care, accommodation, mixed-use, service and storage assets.
Retail transactions finished the year with $8.2 billion.
Despite the above-average annual investment, commercial real estate volumes showed signs of slowing amid economic uncertainty, with $9.1 billion in transactions recorded in Q4 2022.
During the quarter, investment into the national office market returned to its 10-year quarterly average while the industrial and logistics sector picked up.
“Australian commercial real estate investment records tumbled in 2021, and while aggregate volumes remained heightened last year, there was a sense of normalisation as the economic cycle turned,” Cushman & Wakefield’s Managing Director Australia and New Zealand Simon Fenn said.
“We saw a recalibration of the market and investor expectations over 2022 as interest rates moved higher and the yield environment shifted. We’re hearing from clients that although they’re cautious, there’s a significant amount of capital to be ready to be invested in Australia, and the fundamentals of individual properties, not just market-wide trends, are playing a greater role in decision-making.”
“While we don’t expect a return to the outsized investment volumes levels seen in 2021 until the economic outlook stabilises, the Australian commercial real estate market continues to show its resilience and relative global advantages,” Cushman & Wakefield’s National Head of Research John Sears said.
During the final quarter of 2022, national office market transactions totalled $3.4 billion, just under the 10- year quarterly average of $3.7 billion.
This was led by New South Wales, accounting for almost 40% of deal volume, including the NSW Government’s acquisition of 83 Clarence Street from the State Authorities Superannuation Scheme for $362 million.
The industrial and logistics sector recorded the second strongest Q4 in Cushman & Wakefield’s series at $2.2 billion. This compared to the record volume of $5.5 billion in Q4 2021.
Over the quarter, significant deals included GPT’s sale of Rosehill Business Park at Camelia in NSW and Citiport Business Park in Port Melbourne to Wentworth Capital for $256 million.
Alternative and specialist markets recorded $1.6 billion in Q4 to total $9.0 billion for 2022.
Notable transactions included Australian Unity’s purchase of nine aged care sites in South Australia from Bolton Clarke for $220 million and JDH Capital buying the Sir Stamford Circular hotel in Sydney for $210.5 million.
Foreign investment volumes were lower in Q4, representing approximately 29% of total volume, below the quarterly average of 37%.
The largest purchase by an international investor in the December quarter was LaSalle Investment Management acquiring the Crossroads Homemaker Centre (pictured) in Liverpool for $282 million.
