This article is from the Australian Property Journal archive
2021 saw a record $1.5 billion invested into Melbourne’s metropolitan office market, beating out pre-pandemic numbers.
According to Colliers, 40 transactions in the Melbourne metropolitan market totalled $1.5 billion over 2021, with five of those transactions pulling in sale prices above $100 million and three selling for more than $200 million.
This more than eclipses 2020’s $487 million recorded in this market and even 2019’s $916 million in investment.
2021 even outpaced the last peak in investment levels in 2016, where sales reached $1.37 billion.
Colliers attributes this boost in investment to ongoing demand for new and well-leased assets in the market, particularly those with longer WALES and those in Melbourne’s CBD fringe market.
The city fringe market accounted for 18 transactions over the year, for a combined total of around $637 million.
“The increased interest within this precinct has resulted in a tightening of yields particularly within the City Fringe market,” said Peter Bremner, national director of Melbourne metropolitan sales at Colliers.
“Significant transactions to note within this market included 11 Wilson Street, South Yarra which was purchased by German Fund Manager Real IS Group for $73.5 million; 2-6 Gwynne Street in Cremorne purchased by Sydney-based private investor Rathdrum Properties for $41.5million; and 510 Church Street, Richmond, of which 50% was purchased by Irongate for circa $130million,” said Rachael Clohesy, director of capital markets at Colliers.
For prime assets yields often tightened to below 5%, with secondary asset yield’s holding firm. Both asset types are anticipated to remain stable over the coming year.
“High net worth investors and family offices were the most dominant buyer type throughout 2021, followed by institutions and owner occupiers,” said Bremner.
Bremner added that by size the five most significant transactions were completed by major Australian instistutions, such as Centuria, Charter Hall and Irongate.
Though the most distinct buyer type for 2021 was domestic purchasers, who dominated the market with 38 of all 40 transactions, due in large part to ongoing COVID-19 impacts.
“We expect offshore buyers to make Australia a priority for investment in 2022 as travel restrictions continue to ease,” concluded Bremner.
