Perth’s CBD buildings: Who owns our city?

PERTH is being opened up to the world. In the past 10 years, foreign ownership has accelerated in the CBD, outranking local private buyers, governments and even Australian institutions to be the biggest proprietor in the city.

Since 2008, foreign investment in our CBD office space has leapt from 26 to 41 per cent, with every expectation for the trend of international ownership to continue, according to analysis conducted by global real estate firm JLL for The Sunday Times.

International property experts agree that WA’s mining boom proved our worth and the subsequent downturn has proved a bargain. While spare cash for high-rise investments is low in WA, there are billions to be courted from overseas.

This is tasked to players like John Williams, JLL’s managing director in WA.

“Absolutely global capital comes in to look for these assets in Perth,” Mr Williams said. “What it shows is we’re producing assets, we have assets which are attractive in a global sense.

“These companies that have the money to invest, they’re very particular. They’ll research the State forensically.

“You don’t go investing hundreds of millions of dollars in a single office asset unless you’ve got confidence the economy is such it’ll support the businesses that’ll need to occupy the space and pay rent.”

It’s neither desirable nor realistic, Mr Willams said, to want to limit foreign investment. All major cities of the world are built on foreign ownership.

“You need this lump of capital if you want these big, world-class buildings,” he said.

Mr Williams predicts highly competitive Perth hotel room rates will be another international investment drawcard. The State Government’s $440 million construction of Elizabeth Quay and $73 million Yagan Square, part of the City Link project, have been core to making Perth globally attractive.

“These two projects in particular are game-changers,” he said.

Such international investment will change the face of Perth beyond the cityscape and into our psyche, according to Curtin University international business Professor Fuming Jiang.

“If the vast majority of owners are foreigners, probably we’ll lose some of the original West Australian culture,” he said.

“It could be good to be internationalised. At the moment, especially on weekdays in the evenings, the city is half dead.

“The city will become busier, more interesting, multicultural and active — this will be good culturally and economically.”

Professor Jiang says there’s a surge of interest from wealthy private Asian investors wanting to invest in CBD real estate in particular.

“People from Asia, they love living in city high-rises. For young people it’s convenient. It means access to everything there. In the suburbs it’s too quiet, too boring,” he said.

Last year, Quadrant at 1 William Street was sold for $175 million to Singaporean Government- controlled firm GIC. In 2016, the Forrest Centre on St Georges Terrace was bought by China’s YT International for $193 million.

Land at Elizabeth Quay that will be transformed into high-rise towers over the next decade has also been sold by the State Government to a mix of Malaysian, American and Hong Kong companies.

Singapore and Malaysian investors make up a significant portion of Perth’s CBD foreign owners, notes Property Council of Australia WA executive director Lino Iacomella.

The relationships, established in cultural ties decades ago, have continued to grow with substantial commercial links to Asian families who have children attending Perth universities.

“It’s a sign of a maturing capital city,” Mr Iacomella said. “Foreign investors are recognising the value in the local market and making acquisitions at a time when there is less of an appetite locally. They see the value that often the local market may not appreciate.”

Mr Iacomella said foreign investors also appreciate our transparency, respect for the rule of law, joint acquisitions with local investors who have local knowledge, the availability of stock and significant increases in Perth hotel rooms.

Damian Stone, principal of independent Y Research, said since “riding the red dust” high of the mining boom, Perth opened up to the world.

In the past 10 years, Australian institutional investment has held firm, and the drop in State and Federal Government ownership is accounted for by the sale of the Insurance Commission of WA and consolidation of ageing office space.

“With rents dropping the way they are, it’s more advantageous to be a tenant,” Mr Stone said.

“The State Government offices are moving to the suburbs … (where) they play a much more significant role outside the city (CBD).”

He pointed to new government offices in Joondalup, Fremantle, Mirrabooka, Cannington and Cockburn Central.

 

 

THANKS perthnow.com.au

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