UHNWIs outbidding institutional investors for Australian real estate
Australia's high-end real estate market has seen an influx of new bidders for elite properties.
In the past, bidders on multi-million to billion dollar properties have always been institutional investors.
However, many of the recent and current bidders on elite Australian properties have been ultra-high net worth individuals (UHNWIs). Ultra high net worth is currently defined as having assets over AUD30m. This can be family units or individuals.
According to Alistair Meadows, who heads capital group Asia Pacific, based in Singapore, properties worth AUD100m or more used to be sold exclusively to institutional buyers such as managed trusts, listed companies or private equity groups. Now, they are being sold to an increasing number of UHNW individuals or family groups.
Bright Ruby Resources is an example of the trend. It is a private investment firm owned by the Du family in Shandong, China. Since December 2012, it has spent a total of AUD264m on two buildings located in Sydney. It is also reported to be a participant in the bidding for an office block that is located on George Street and should eventually sell for more than AUD500m.
In Singapore, Bright Ruby is even more active, paying AUD1.04m on the Grand Park Orchard Hotel, which includes a retail area. This is the highest amount of any commercial real estate transaction in Singapore history. It is possible that Bright Ruby pooled resources with other Chinese UHNWIs to complete the transaction.
In Sydney, a UHNW from Asia spent nearly AUD60m to purchase a shopping centre on the north-west of Sydney. Other office blocks in Sydney are being purchased by UHNWIs for AUD40m and AUD45m respectively.
So far, only six large transactions involving commercial real estate in Australia have been completed by UHNWIs but they are buying a lot of Australia's finest residential real estate, including a mansion that sold for slightly over AUD20m in Melbourne, which was the largest residential sale in their history, and a waterfront mansion in Sydney called Altona.
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