This article is from the Australian Property Journal archive
HONG Kong toy manufacturing tycoon Francis Choi has acquired a half share of North Sydney’s Northpoint Tower from South African group Redefine Properties, at more than $400 million.
The billionaire has been in talks to purchase the interest in 100 Miller Street for months, with reports tipping a sum reflecting an asset value of $600 million. However, according to CBRE’s latest Australia Marketflash report, the figure values the tower at $812 million.
Since April last year, Choi has purchased the Exchange Centre in Bridge Street from Malaysia’s KWAP for $335 million, and 1 Castlereagh Street for more than $220 million in December from US giant Blackstone.
Northpoint has 34 levels of office space and is less than 100 metres from the future site of the Victoria Cross metro station, and is positioned on a high-profile triangular site with frontage to Pacific Highway.
Redefine and Cromwell Property Group purchased Northpoint in 2013 for $287.7 million and have almost completed an overhaul of the property that has seen the introduction of a Vibe hotel.
Redefine has been a strong backer of Cromwell, but sold off a 19.5% stake in the group to Singapore-listed ARA Asset Management for around $405 million earlier this year.
Despite a notable pick-up in commercial property sales activity through the second quarter of 2018, commercial property transaction volumes across Australia this year are still expected to come in behind those seen in 2017, according to the CBRE report.
“The first half of the year has allayed fears that a dramatic decline in buyer activity is on the cards and the market is set for a more subdued phase.
“After a relatively quiet start to the year, activity in the second quarter picked up substantially, proving that there is still considerable appetite for real estate assets in Australia.”
CBRE said offshore capital is still coming into the market, but overall volume has declined 52% in the first half of this year, compared to the first half of 2017. The USA accounted for $994 million, Singapore $624 million and Hong Kong $560 million were the key sources. Chinese activity was down 81% to $250 million.
Overall volumes are below the $15.1 billion worth of assets that transacted compared to $13.1 billion in 2018, according to CBRE’s figures.
“Partially explaining this is the mix of domestic versus offshore capital is shifting as local buyer activity accounted for approximately 79% ($10.4 billion) of total transaction volume; above the circa 70% five-year trend.”
It said transaction volume for the second quarter was at $8.6 billion, up 88% on the first quarter’s $4.5 billion, but down 18% on the corresponding period last year. The office sector accounted for $5.6 billion of the transactions, followed by retail with $2.2 billion, while industrial and hotels returned $513 million and $228 million respectively.
The numbers largely back up those released last week by Cushman & Wakefield, which also had overall transaction volume at $8.6 billion.
The number of deals has remained consistent, with 118 in the first quarter and 115 in the second, but the average size jumped by 93% to $74.4 million. As well as Choi’s North Sydney purchase, this was largely driven by large office transactions in Sydney, namely Rest’s $900 million acquisition of a one-third interest in Quay Quarter Tower, Mirvac taking a 50% stake in 275 Kent Street on behalf of ISPT, and three large shopping centre transactions in Melbourne, including QIC’s acquisition of half-shares in Werribee Plaza, at $611.5 million, and Pacific Epping, at $372.5 million.
Australian Property Journal
