Australian property funds in 'massive shift' to Europe

Australian property funds shifted their investment focus to Europe in 2006 by investing EUR 4.5 bn in the region - a 350% increase on the year before. Germany (EUR 2.6 bn) and the UK (EUR 1.2 bn) attracted the majority of the Australian investment, according to property advisor Jones Lang LaSalle (JLL). Other European countries targeted by the funds include the Netherlands, Poland, Belgium and Spain.

Overall, the Australian funds purchased about EUR 9 bn worth of assets in 2006 outside their domestic market, where product is limited. The level of foreign acquisitions was 7% down year-on-year. while Australian funds were the largest cross-border investors in the US in 2005, investment in the Americas was down 67% year-on-year to EUR 2.2 bn in 2006. Australian investment levels in Asian property markets remained stable at EUR 2.2 bn. The majority of the acquisitions were in Japan (almost EUR 900 mln), Hong Kong (almost EUR 750 mln) and New Zealand (EUR 370 mln).

Padraig Brown, global strategy and research director at Jones Lang LaSalle said: 'Australia is one of the world’s most highly securitised real estate markets, with inflows into property funds totalling over US$4 billion annually, and intense domestic competition encouraging funds to seek opportunities and enhanced returns offshore.' This trend will gather momentum and Australian fund investment volumes outside their domestic market are expected to be higher again this year, said Tony Horrell, ceo of the international capital group at JLL.

Click on the link below to read about Rubicon Europe Trust (REU) Group making its first acquisition in Austria for EUR 58 mln.