AUSTRALIA has become the largest liquidator of overseas assets in the world, with those billions of dollars now being returned to investment in the domestic commercial property sector.

Jones Lang LaSalle’s head of research and consulting in Australasia, David Rees, said Australian investors divested about $21.6 billion of offshore assets, including hotels, between 2008 and 2011. Over the past two years, Australians had sold off $US12.8 billion from offshore investments.

”This has been, by a big margin, the largest offshore liquidation of any country, equivalent to the sales of the next two countries, UK and Ireland,” Dr Rees said.

”The refocus on the domestic market and repatriation of capital freed up from asset sales represents an additional source of investment funds to be deployed domestically.”

The return of local money has further bolstered property investment as the global financial crisis pushed more foreign investors towards the Australian property market.

JLL research shows that last year offshore investors bought $3.7 billion of Australian commercial real estate – 29.5 per cent of transactions above $5 million by value. This is the largest percentage on record and just below the record dollar value of $3.8 billion achieved in 2010.

But a JLL investment report, What now, what next, produced by Dr Rees and research chief Andrew Ballantyne, found there were other key investment drivers.

These were long-term factors such as the transparency of the regulatory environment, the diversity of the economy and the sophistication of financial markets.

Other attractions, such as the yield spread, rapid growth in the resource-based states and the changing cross rates of the $A against a range of other currencies varied over time. ”As a result, sources of capital will also be subject to change,” Dr Rees said. The lead this year would be taken by the commodity-based economies of Queensland and Western Australia.

He said another property driver was Australia’s diversified economy, with a profile similar to that of the US. In the US, the four largest sectors were finance, manufacturing, healthcare, and professional services. In Australia, the four largest were finance, mining, manufacturing and construction.

”The diversity of the economy, rather than its dependence on a few high-growth sectors, accounts in large measure for the relative stability of commercial property,” he said. ”It is this diversity and relative stability that probably attracts many offshore investors.”

Dr Rees said one last key investment driver was the strength of the $A against the $US, the euro and sterling. This was frequently cited as a deterrent to offshore investors, but the reverse was true. ”Australia is a price-taker in global capital markets. Therefore the Australian dollar and domestic asset values tend to be positively correlated,” he said.

”A strong Australian dollar/US dollar cross-rate has been associated with net capital inflows into real estate because the strong Australian dollar is a symptom of the attractiveness of Australian assets to offshore investors, including real estate investors.”