Sydney declared no. 1 location for international capital

According to Colliers, with top-tier city offices to remain a primary asset target in 2021, investors with international capital will flock to the harbour city in search of assets that meet health, sustainability and technical benchmarks.

“Grade A offices in gateway cities like Sydney, Melbourne, Singapore and Hong Kong SAR are a key area of focus for regional investors, with COVID-19 seen as likely to accelerate a shift towards higher-quality assets that meet rising demand for health and sustainability,” said Terence Tang, Colliers’ managing director for capital markets and investment services in Asia.

“Due to the growth of tech companies and start-ups in the region, there is also a high demand for technology-related real estate including business parks.”

Also evident, Mr Tang said, is a shift to new or emerging business districts such as Western Sydney, which is being viewed as an “ideal” location for companies experimenting with hub-and-spoke office models and a new generation of technology tenants.

But Sydney’s attractive office landscape in not alone in exciting commercial investors, with logistics/industrial and data centre assets said to be particularly popular in 2021 as a surge in e-commerce continues.

“In large urban centres where infrastructure is a challenge, last-mile delivery facilities are becoming more and more important in meeting demand,” Mr Tang said.

Moreover, with competition for prime assets set to remain strong, investors are also eyeing opportunistic hotel and retail assets to position for an expected recovery in late 2021 and 2022.

“If you are counter-cyclical, strategically positioned hotels and retail with big land banks offer great opportunities,” said John Marasco, managing director, capital markets and investment services in Australia and New Zealand.

The expected recovery, however, does not overshadow the momentum that is building around alternatives such as healthcare, student accommodation and the build-to-rent sector.

“There is a bit of a window to secure land with less competition from office developers and build-to-sell apartments,” Mr Marasco said.

“The government has also been providing tax concessions and there is a shortage of rental accommodation in high-demand locations.”