What made 2021 a record year for real estate investments in Australia?

By Greg Bell

Lightyears ahead of 2019's $64.5 billion, 2021 saw a record $71 billion in commercial real estate transactions according to the Australian Financial Review by data compiled by Real Capital Analytics. Across the nation, industrial and retail property came out on top of all other sectors, followed by transportation and logistics.

It is a new era for commercial real estate with low-interest rates, government stimulus and population growth coming out of the pandemic lockdowns.

But what contributed to the success? This article will explore several reasons why 2021 was a record year for real estate transactions.

Post-COVID-19 optimism

Coming out of nationwide lockdowns, investors had saved up and were ready to get back into the market. The successes of Australia's vaccination rollout — although beginning with a slow start — put the nation at the forefront of total vaccination rates at more than 95% of people over the age of 16.

With a jumpstart to property transactions, Australia positioned itself as a stable investment harbour for investment capital to global property investors.

Additionally, at a nearly zero interest rate, investors were excited to explore new avenues for income and found their way into real estate. The industrial property sector has shown no signs of slowing down even moving into the second half of 2022. Low vacancy rates are common under industrial rentals today — especially for healthcare asset sales with investment trusts hitting a 12-time increase over the past 18 months according to The Urban Developer.

Retail buildings also performed well over the course of 2021 with Blackstone and GIC leading the charge according to Real Commercial Analytics (RCA). Blackstone purchased nearly 50% of shares of the Decus Australia Logistics Trust, after selling over $2 billion worth of its Mileston Logistics portfolio to GIC for $3.8 billion.

Retail centres went through a series of high-level deal volumes throughout the year resulting in $17.2 billion in acquisitions, a 138% year-over-year increase. R. Benjamin Martin-Henry, head of the Pacific RCA mentions that "the near 140% increase in retail transactions is almost purely driven by domestic investors who appear to be warming to the sector once again." Due to newly opened borders and thriving commercial economic growth, Australian real estate saw a serious increase in 2021.

Compared to global competitors, Australia has come out on top in terms of bouncing back from post-pandemic lockdowns and economic downturns — especially in the retail sectors.

Want to get a bite of the boom? Contact a Ray White Surfers Paradise commercial real estate professional today. We keep an eye on the market for you and can help you make the best investment for your goals with boutique-level service.

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