US investors spent $1.3 billion, while investment from Asia remains positive, with China leading investment so far this year at $1.5 billion.
Chinese demand, which was relatively subdued during 2018, has bounced back in 2019, with Singaporean investors also spending $3.3 billion last year and $0.6 billion this year.
It is understood that almost $1 trillion has been spent on commercial real estate globally over the past 12 months with offshore investors accounting for 40 per cent of total sales volumes in 2018, and 38 per cent so far in 2019, up from 35 per cent in 2017.
Knight Frank head of research and consulting Ben Burston said the share of cross border investment in Australia was well above the global average, reflecting the strength of global demand.
Globally, around one third of investment is cross-border, so Australia is one of the markets where cross-border capital is most prevalent.
Knight Frank head of institutional sales Paul Roberts said despite a slowdown in the economy in Australia, commercial property investors were still very active.
“Subdued economic growth in recent months has not dampened demand for well-let office assets across the country.”
“Sydney and Melbourne continue to see strong interest, and we now see more investors looking for opportunities in Brisbane and Perth as leasing fundamentals improve in those markets.”
While recent growth has been subdued, Australia has experienced the longest period of economic growth, with 108 quarters in the growth cycle – or 27 years, followed by Korea, with 38 consecutive quarters of growth – or 9.5 years.
A long-term lowering of GDP growth and interest rates in a late-cycle economic environment seems now to be stimulating an increase in cross-border capital flows, both to diversify risk and chase enhanced returns.