2024 is shaping up to be a landmark year for Australia’s commercial real estate, after decade-low activity levels in 2023.

With offshore investments dropping to just $8.8 billion – half the volume spent in 2022, expectations are high for a major turnaround. Data from Real Commercial suggests a highly anticipated inflow of foreign capital that could reshape the competitive landscape and create abundant opportunities for both investors and vendors.

Traditionally, foreign investors have been pivotal in the Australian market, typically accounting for about one third of all transactions. This figure dropped to 22% last year, marking a 10-year low. But with a more favourable financial climate on the horizon and lending criteria expected to ease, there is a robust case for a resurgence of foreign capital inflow into Australia.

This revival is set to spark intense competition for top-tier commercial assets, making right now the ideal time for investors to bolster their portfolios with secure properties. Among the most sought- after asset classes are future-proof sectors such as fast food, early education, healthcare, and convenience retail. These sectors not only consistently display recession resilience and long-term returns but are also poised to benefit substantially from increased international interest.

For vendors, the return of foreign buyers is promising. The growing demand is likely to escalate property values, creating prime selling conditions. Australia’s appeal to offshore investors continues to strengthen, owing to our political stability and economic resilience. These attributes are further underpinned by expected population growth, which will outpace the OECD average significantly over the next five years.

Interestingly, the Australian dollar currently presents a dual opportunity in the market.

Its current position offers an attractive entry point for foreign investors, providing exceptional purchasing power and the chance to invest in a robust economy at compelling valuations.

Simultaneously, financial analysts project an upswing in the Australian dollar’s value, forecasting a rise against the US dollar by December 2024. This anticipation of appreciation signals a confident economic outlook and suggests that while the current exchange rate benefits investors right now, the strengthening dollar is poised to enhance the long-term value of their investments as well.

As we look forward to 2024, the Australian commercial real estate market is on the cusp of a revitalised era, with the present conditions inviting strategic acquisitions and the forecasted currency appreciation promising to bolster future gains. This unique market phase offers immediate advantages and a positive long-term horizon, making it an opportune time for proactive investors and vendors, both on and offshore.

“Australia presents a golden bridge for Asian investors seeking stability and growth. A favourable currency exchange coupled with Australia’s robust economic fundamentals has created an unparalleled opportunity for our clients.’

– Zomart He Burgess Rawson Partner

Analysis provided by Real Commercial