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Australia - a market awaiting a strong return

Louise Kavanagh
Chief Investment Officer, Head of Funds Management, Asia Pacific
Australia roundtable
The COVID-19 pandemic derailed a generation’s economic progress by sending the Australian economy into a technical recession in 2020. A renewed lockdown in New South Wales this year may produce another quarter of falling GDP. However, Louise Kavanagh, Chief Investment Officer and Head of Funds Management, Asia Pacific, and the other participants from PERE’s Australia roundtable are confident that growth will bounce back as the pandemic eases, especially as the nation’s closed borders have not kept out the foreign capital which continues to seek Australian real estate.

While the panel admitted that Australia’s vaccination program had been slow compared with other developed markets, the consensus was that a post-lockdown recovery would be swift, as it was after the first lockdowns in 2020.

Prior to the latest lockdown, the Australian economy had rebounded despite the effect of border restrictions on the education sector – the third-largest services industry – and tourism. So, once the border restrictions ease and education is booming again, tourism returning, it bodes well for Australia.

 
Louise Kavanagh, Chief Investment Officer, Head of Funds Management, Asia Pacific. 

There has been particularly strong interest from domestic private investors, the roundtable participants agreed, as the low-interest-rate environment and concern about global stock markets pushed capital into yield-bearing real estate.

Meanwhile overseas investors have been more cautious. Offshore capital tends to be looking to put money to work with managers they’ve worked with before, as they can’t physically get together with new managers, so track record and established relationships are important. However, the participants agreed that overseas players already established and with teams in Australia were still keen to invest and able to execute.

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