This article is from the Australian Property Journal archive
OFFSHORE investors have turned their attention to Adelaide’s office market, attracted to the higher yield opportunities than those in the heated Sydney and Melbourne markets.
Savills’ latest Quarter Time national office report also found that office investment volumes reached $475 million over last year, more than 25% above the 10-year average of $378 million, but less than half of 2016’s $987 million – a year that also saw the value of office sales of more than $5 million hit their highest level over the past decade.
Katy Dean, Savills associate director for research & consultancy, said the offshore investors had dominated the city’s recent activity, accounting for almost 84% of major office investment purchases in 2017.
This marked a massive leap from the 10-year average of around 30%.
Savills Adelaide’s director for capital transactions, Peter Isaksson, said Adelaide was growing increasingly more attractive to Asia-based investors, most notably for its price point and upside potential.
“Adelaide market prime yields are still seen as a drawcard against assets on the eastern seaboard and overseas markets, a promising outlook for investors seeking to deploy capital under a counter-cyclical strategy,” he said.
Singaporean group AEP Investment Management secured 45 Pirie Street from the department of the Attorney General for $105 million at a beefy yield of around 7.5%.
The year was rounded out with Dexus exchanging contracts for its 20-storey, 31,000 sqm ANZ House at 11 Waymouth Street for $202.3 million with another Singaporean purchaser, Mapletree, at a circa 6.0%.
German group Real I.S. is believed to have reached due diligence with another offshore player for its A-grade, 16,484 sqm 77 Grenfell Street building for around $110 million late last year, with the price tag set to represent an initial passing yield of around 8.25%.
Savills is preparing to market the 17-level, 19,000 sqm 100 King William Street Commonwealth Bank building on behalf of Bob Maidment, who purchased the building in 2008 with investment partners for $66.6 million and undertook key refurbishments. The building was offered for sale early in 2016.
Blackstone has withdrawn its 80 Grenfell Street office building from the market, after spending $500 million on the Motor Accident Commission portfolio of five properties, which included the 15-level, 11,000 sqm B-grade 99 Gawler Place and 12,500 sqm, 15-level A-grade 121 King William Street for a combined $90 million-plus.
In another major deal for the year, the ground lease of the 10-level Citi Centre Arcade office and retail building at 141-159 Rundle Mall sold for around $42 million to a private investor, at a high yield of around 10.0%. It has a shopping centre on the lower levels and eight levels of B-grade office space that are fully leased to SA Health.
Australian Property Journal
