Abstract:
Like other developed countries, commercial property in Australia is an important investment asset class. 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 2006, the estimated size of the Australian commercial property investment market is AU$449 billion
of which Australian Institutions own approximately AU$178 billion (40%).
Due to illiquidity and high value thresholds there are several property investment products which allow investors
exposure to local and overseas commercial property. The largest is public equity with Real Estate Investment
Trusts AU$136 billion representing close to 10% of the Australian Stockmarket. Next is private equity
comprising wholesale property trusts and property syndicates at a combined value of AU$ 69 billion. Debt
securities offer an alterative return stream with the AU$71 billion whole commercial property mortgage sector
and the emerging AU$12 billion traded debt securities sector.
In separating the equity, commercial property and publicly traded debt components, the size of the Australian
investment market for these asset classes can be compared to the global equivalent. The total value of the
global investment market is AU$152 trillion, and is apportioned equities AU$59 trillion (39%), debt securities
AU$84 trillion (55%) and commercial property AU$9 trillion (6%). The Australian market share is 2% of the
global investment market, although the percentages range across the different investment sub-markets. The
Australian commercial property market accounts for 2.4% of the global property market as there is a significant
proportion of Australian investment grade property already owned by institutions.
