Blog

March 17, 2020

FOREIGN INVESTMENT IN AUSTRALIA

With the economy in a (reasonably) healthy position and the government taking at least some measures to nullify the slowdown, investor confidence has strengthened in commercial property markets. The next few years will improve the performance of the commercial property investment sector and allow it to develop without limitation.  Australia is no stranger to foreign investment, and in the last ten years, it has increased immensely. If someone was to ask you where foreign investment dollars came from, could you answer?

Where does foreign investment money come from?

Foreign direct investment (FDI) in Australia totalled US$ 344.9 billion in 2019 which has reinforced Australia’s position in the top ten global FDI destinations.

The Top 5 investing countries in order might surprise you, and are:

  1. United States
  2. United Kingdom
  3. Belgium
  4. Japan
  5. Hong Kong (SAR of China)
  6. Mining and Quarrying - Mining dominates FDI flows as it receives more than 37.8% of FDI into Australia
  7. Manufacturing - The manufacturing sector received 11.1% of total FDI
  8. Financial and Insurance Activities - Also received 11.1% of total FDI flows
  9. Accommodation and Food Service Activities - a noticeably smaller amount of FDI but still very significant for the investment market

What industries are attracting money?

How does all this relate to the property investment market?

The last ten years have been a rollercoaster ride for the commercial real estate sector in Australia, but industry has no doubt played a part in the recent, consistent growth. The office sector has retained a bastion in the market with increasing demand from local businesses and foreign investors.

The growing economy has guaranteed that Industry keeps pushing without breaking speed. With an economic growth rate of 2.1% in 2019, matters have been increasingly positive for the commercial sector.

Foreign investors who have been burying money into Australian Industry for years, know that this is the right time to create new sources of revenue and finalise deals as prices become clearer in the strongest markets. They all love to make money, and they aren’t picky where they make it.

The latest interest rate cuts will draw foreign investment dollars like bees to pollen.

The start of 2020 has brought with it an interest rate cut larger than predicted and therefore will create a rising interest for investors. This will be widespread across the commercial property sector with the most interest being in office buildings.

The Flawless Economic Environment For Investment

The Australian economy has been progressively increasing and has entered its 28th consecutive year of growth. We are the only country to have accomplished this. For foreign investors, this means we are a low-risk region for foreign investments. This positive position of exports and infrastructure will maintain our already strong economic growth. It’s now that foreign investors will be looking to grow.