Capital inflow to reach $US1 trillion for property
Volatile sharemarkets and low interest rates have forced cash to be redirected to bricks and mortar amid forecasts as much as $US1 trillion may flow through the property sector in the coming year.
This would be 6 per cent higher than last year, the CBRE Global Investor Intentions Survey 2016 shows.
Qualitas has announced the first asset to be financed by its Opportunity Fund will be the $107 million Iconic Waterloo apartments.
The 2016 survey, which was conducted between January and early February, captured negative sentiment from volatility in China's sharemarket.
The survey asked investors how much capital (gross acquisitions) they would deploy in real estate purchases this year.
Respondents said they expected about $US1.16 trillion of capital targeting property investment in 2016.
CBRE executive managing director, capital markets, Pacific, Mark Granter said the survey confirmed Australian real estate remained strongly sought-after and was the top destination for Asian capital.
"Also apparent in the Australian results is that Brisbane has moved up the list of preferred destinations for capital, which may suggest that investors are looking for counter-cyclical opportunities as the market approaches the bottom of the cycle," Mr Ganter said.
Office and retail were cited as the more popular capital destinations, but in Australia, mixed-use residential was also in demand.
This comes as the $300 million Qualitas Opportunity Fund expands with the financing of the $107 million Iconic Waterloo apartment development in Sydney's inner west.
It will comprise 78 apartments, with associated retail spaces, and is a joint venture between developers Thirdi and Milligan Group. Qualitas will provide mezzanine finance to the project, alongside the senior lender, NAB, to facilitate the site purchase and ultimate development.
Tim Johansen, managing director of real estate finance at Qualitas, said the fund regarded inner city developments as popular for investors and owner-occupiers.
It is the first asset to be financed by the Qualitas Opportunity Fund.
"The partnership with Thirdi and Milligan Group ticks all the boxes for the Opportunity Fund, including strong, risk-adjusted returns and a high level of trust in the team behind the project. We are confident they will deliver a successful, sought-after and profitable development with Iconic Waterloo," he said.
That the banks are also pulling back on some lending has led to a rise in demand for private project financing.
"This will help temper some of the market and lowers the lending leverage, which opens the gap for private capital," Mr Johansen said.
"The banks are doing this for a reason . . . which we see as a positive for the property market."
