Last month headlines hit that the Australian Government would double application fees for foreign investors in a bid to “put the interest of Australians first”.

Offshore investors are to be hit with an additional $455 million in FIRB fees over the next four years as a result of an election commitment by Labor.

News spread of the rush that ensued to file foreign investment applications in the final 24 hours before the changes came into place and many questioned the impact this would have on foreign interest in Australia’s real estate market.

It’s no secret that this, on top of the recent multiple raises on interest rates, has created a fair bit of tension for any investor, whether on or offshore.

However, despite turbulence, COVID-19 included, we have found investor activity has never stopped, which means they are becoming more and more sophisticated.

Australia is too-desirable of a location for overseas investors – the economic stability, natural beauty, favourable climate, multiculturalism, the space; no government deterrents will interfere with that.

In fact, even with these disincentives in place, globally, tax and rates are still very reasonable compared with many other dominant countries. As of now, the property price is very affordable.

This is especially true for the commercial and retail real estate market which is seeing a significant boom from overseas investors in all major cities across the country.

Major recent transactions for Savills include Alexandria Homemaker Centre in Sydney for $202 million AUD and the Commonwealth Bank Place 1-25 Harbour Street, Sydney, NSW for a staggering $609.7 million AUD.

So who is snapping these up?

Chinese investors used to be at the top but this is no longer the case. Recently we’ve seen many inquiries from Malaysia, Singapore, Korea, and Indonesia. Outside Asia Pacific, USA and Europe are the two leading destinations.

According to the Savills Investment Quarterly report, despite the new risks for the economy, property returns are well anchored. Retail property returns have seen a gradual improvement from the lows of 2020, with annual returns sustaining the positive momentum in March for example with 6.9 per cent, compared to -6.3 per cent at the same time last year.

Overall, AU$15.9 billion in retail sales activity was achieved, up from AU$5.4 billion in 2020, a sharp turnaround from the previous year.

According to the RCA, foreign investors account for 11.2 per cent share of retail acquisitions in AUS ($10M+) in 2021, up from 9.4 per cent in 2020. The average share pre-pandemic is approximately 21.8 per cent and in 2022 YTD, cross-border investors account for 26.2 per cent.

So will the government’s deterrents impact offshore investment into the Australian retail and commercial real estate market? The long-term answer is no.

Asian investor interest in Australia will remain strong and this injection to the Australian economy should be seen as a positive off the back of COVID-19 challenges. This is clear even in the interest of activities such as the Asia Property Awards, hosted by PropertyGuru which will place Australian developments on the global stage at the end of this year, with awards dedicated solely to the commercial/retail market.

Provided migration numbers stay consistent and/or increase then investment activities won’t stop. We’ll continue to see Australia as a desired country. It has always been one of the top destinations for Asian investors and this won’t change, in my opinion, especially in major cities such as Sydney, Melbourne and Brisbane/Gold Coast.

One thing that is important to healthy investor activity is the government recognising the importance of foreign investment and continuing to show favourable, understanding, and fair conditions across the board.

Benson Zhou is CBD and metropolitan sales state head – Asia markets at Savills Australia and judge on upcoming PropertyGuru awards and director.