Australian commercial property investment market: Styles, performance and funding

Australian commercial property is a physical asset class that forms an important part of the capital market universe. On available data, the extent and composition of investment grade commercial property and associated property investment products can be measured and compared to the wider Australian investment market. As at December 2012, the estimated Australian institutional grade commercial property stock was AU$681 billion. The size of the core property investment market (office, retail and industrial) is AU$280 billion of which approximately AU$195 billion (70%) is owned by Australian Institutions. Due to illiquidity and high value thresholds, a range of securitised property investment products exist which offer investors exposure to local and overseas commercial property. The largest is public equity with Real Estate Investment Trusts capitalised at AU$89 billion representing close to 4% of the Australian Stockmarket. Next is private equity, comprising wholesale property trusts and property syndicates at a combined value of AU$84 billion. Debt securities offer an alternative return stream linked to property in the form of the AU$165 billion whole commercial property mortgage sector and the AU$16 billion traded debt securities sector.