Foreign capital inflows into Pacific (Australia and New Zealand) real estate in H1 2018 totalled $3.1 billion, down from the $4.2 billion recorded in H1 2017. Causes for this decline are two-fold: a smaller total deal volume in Australia and an increase in activity from local players, particularly in large deals. By contrast, New Zealand experienced a significant inflow of foreign capital into major core assets.
There remains strong overseas interest in Pacific assets that has contributed to yield compression over recent years and is bringing Pacific real estate closer in line with global markets, in terms of pricing. But local parties, especially in Australia, have been more competitive in institutional grade asset purchases and thus are accounting for a larger share of investment.
H1 2018 saw a large increase in Pacific investors going overseas: volumes have more than tripled since H1 2017. But the 2017 result looks more of a blip and 2018 a return to more normal levels. There were no outbound purchases from New Zealand investors in H1 2018. Australian investors were involved in all 13 assets for a total value of $1.4 billion. The largest outbound investment was by QSuper purchasing a $633 million office/condo building in New York.