This article is from the Australian Property Journal archive
WHILE the commercial real estate market is approaching what many consider to a turning point, downwards valuations of assets continue to wash through the sector and cap rates on institutional grade offices nudge closer to 7%.
Cromwell Property Group’s draft valuations have shown a decrease of $99 million or 4.5% on prior valuations over the six months to the end of December.
Capitalisation rates across its Australian investment portfolio expanded by 35 basis points to 6.99%.
Cromwell recently secured 20,000 sqm of lease renewal agreements following ESG upgrades at its 545 Wickham Terrace office property in Brisbane’s sought-after CBD fringe suburb of Fortitude Valley. Technology One, AECOM, and Bechtel are the re-signees at the building known as HQ North, which has a 6-Star Green Star v2 Office Design rating, the highest possible rating by the Green Building Council of Australia.
Its assets also include 207 Kent Street in Sydney, the Qantas headquarters in Mascot, 700 Collins Street in Melbourne, and 400 George Street in Brisbane.
Australia’s biggest owner of office towers, Dexus, is calling the bottom for values and vacancies in the battered office sector, as a clearer picture of companies’ workspace requirements emerges and an interest rate cutting cycle nears.
Cromwell’s revaluations follow a 5.0% fall in values for the six months to the end of June, when some $115.5 million was wiped off the value of its Australian investment portfolio.
The group in 2024 exited its troubled European operations, selling its remaining fund management platform and interests in the continent, including the Cromwell Italy Urban Logistics Fund and €2.2 billion Cromwell European REIT, to Stoneweg for $457 million.
Cromwell will release its half-year results on 27th February.
