“ASSET tourists” from overseas are scoping Australia for bargain prices and debt-laden portfolios ripe for investment.
The trend, in which foreign companies target the Australian market to scoop up the best deals, is giving law firms an increasing amount of work in foreign investment, M&A, and property and construction.
Minter Ellison this week claimed a major deal for its corporate and construction teams in Japanese housing developer Sekisui House’s finalised deal to buy a 75 per cent stake in a $190 million portfolio of landholdings in both New South Wales and Queensland.
“Australia is becoming an ‘asset tourist’ location,” corporate partner Martin Bennett, who works in Minters’ Sydney office said in an interview with The New Lawyer.
“As the market goes through these various paces it does represent opportunities for other players internationally that have cash and are looking for returns they may not be getting elsewhere in the world,” he said.
Sekisui House, Japan’s largest housing developer, has entered into a joint venture with ASX listed Payce Consolidated Limited, acquiring a majority interest in development sites are Homebush Bay in NSW and Ripley Valley in Queensland.
The company had identified the gap between supply and demand for residential housing in this market, Bennett said.
The deal was a significant coup for Minters, which was handed the client by a former Minter Ellison lawyer, Andrew Merriot, who worked with the firm 10 years ago and now works with Allen & Overy in Tokyo. Merriot contacted Nicole Green, construction partner and another lead partner on the deal, telling her of Sekisui’s proposed entry into the Australian market.
It is a new client for Minters, but the deal is just the first of a series of transactions Sekisui is planning, Bennett said.
The deal represents a growing market for foreign investors, or asset hunters, in the Australian market. Cash-laden investors are capitalising on opportunities as Australian developers, in particular, rush to offload parts of their portfolios. Bennett said. “They thought it was good timing because the Yen is very strong against the Australian Dollar, and also our property values are … I wouldn’t call it depressed, but they are a bit low.”
South African investors are leading the charge on property and development opportunities. The country’s largest property trust, Growthpoint, announced this week that it had completed a $200 million deal to recapitalize the Orchard Industrial Property Fund.
Last month another South African investor, Kirch Group, picked up a 27.4 per cent stake in Abacus Property Group. Meanwhile, the Oman Investment Fund invested $31m into property developer Becton in Melbourne.
With the consolidation in the industry it is inevitable there will be further acquisitions, both directly as land buy-outs and in the real estate investment trusts, some of which are under stress at the moment, said Bennett.
The trend is a welcome one for construction and property lawyers whose work has dried up in recent months as projects either collapse or are shelved.