COVID - its impact is truly global, including on real estate in Australia. Travel restrictions and isolation measures have altered how we work, live, invest and shop. So how have lockdowns, working from home and social distancing affected real estate markets in Australia?
Like elsewhere in the world, tourism has suffered significantly with few overseas arrivals, and the hotel sector has been hit hard. In some centres hotel occupancy is down around 60% on last year. In the ANZ Property Council of Australia survey for the September 2020 quarter, 66% of respondents believe the hotel and leisure sector will be most severely impacted by COVID, followed by shopping centres at 15% and commercial office at 13%. The latest figures indicate residential construction has dropped by 11% on last year. On a positive note, over 60% of residential developers in the ANZ Property Council survey reported that the government's home builder scheme is having a positive impact on their business.
With COVID normalising remote working arrangements, consumers are shopping from home leading to weaker demand for bricks and mortar retail space. Though, there are signs of recovery. Many Australian states and territories have relaxed restrictions allowing retailers to return to business as usual. Retail assets have benefitted from a strong anchor tenant such as major supermarkets and hardware stores.
Increased online shopping has led to a surge in the industrial property sector. We witnessed the continued rise of the logistics and industrial property investment funds, the latest sign of booming demand for Australian industrial real estate. Industrial investment hit $1.65 billion in the June 2020 quarter, the strongest second quarter on record for logistics deals. Of course there's much talk about the future of office accommodation, months of working from home and social distancing on return to the office have caused tenants to consider continuing an office and home hybrid arrangement and to reassess hot-desking, open plan offices and shared spaces. This will surely impact office assets in the longer term.
Despite the pandemic, Australia remains one of the safest countries to invest in with our low interest rates and Australian dollar. Australia is one of only 10 countries to retain its AAA credit rating during the pandemic. Our strong fiscal position supports the government's investment focus into infrastructure projects Australia wide.
Encouragingly, we are seeing foreign investment continue in Australian real estate with the recent sale of a 50% interest in the iconic Rialto building in Melbourne, and Mitsubishi Estates acquisition of a stake in the One Sydney Harbour project. Although there is global uncertainty, Australia's real estate sector is already repositioning itself for the future and there are attractive opportunities for both local and offshore investors.