WSJ: Australia Searches for Gold In U.S. Commercial Real Estate

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Australia Searches for Gold In U.S. Commercial Real Estate

By CHRISTINE HAUGHNEY
Staff Reporter of THE WALL STREET JOURNAL
August 22, 2005; Page C1

Australian pension funds are snapping up U.S. commercial real estate, adding heat to a steamy market.

In the past 12 months, Australians have purchased $6.8 billion of American office buildings, shopping centers and other commercial properties, according to Real Capital Analytics. During that period, Australians accounted for 37% of the international capital that poured into U.S. real estate, the New York research firm says.

Australians topped German investors, the biggest foreign investors in U.S. real estate lately, who invested $3.5 billion over the same period, according to Real Capital. The rest of Europe combined ranked third with $2.8 billion in deals. And for the first time in its 17-year history, the Association of Foreign Investors in Real Estate, a trade group based in Washington, next year will be run by an Australian, who is taking over from a German investment executive.

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Australians appear undaunted by high prices in the U.S. real-estate market. "I know current U.S. investors that wouldn't touch these things at the prices that were paid," says Bill Starn, a partner in PricewaterhouseCoopers's national real-estate group, who has audited some Australian investment firms. Still, he said the deals met the parameters that Australian investors set for themselves.

Part of the confidence stems from a strong currency. The Australian dollar is up 10% from its recent low on June 17, 2004, against its U.S. counterpart. A stronger Australian dollar makes assets denominated in U.S. currency cheaper.

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Write to Christine Haughney at [e-mail]

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