This article is from the Australian Property Journal archive
IT has taken 10 months into the year, but a Collins Street freehold has been snapped up by an offshore private family office after intense competition that highlights there is capital looking for the right property investment.
Cushman & Wakefield’s Daniel Wolman, Oliver Hay and Leon Ma in conjunction with MMJ’s Joel Wald, negotiated the sale of 406 Collins Street in the heart of Melbourne’s CBD on behalf of a local investor.
The agents declined to comment on the price but said this is the first freestanding office building to sell on Collins Street this year.
Industry sources speculated that the sale price is excess of $30 million.
The agents said the property attracted over 150 enquiries, 30 inspections and 11 offers.
Oliver said the campaign attracted global interest, mainly from owner occupiers and value-add investors.
Although it is believed a private family from Vietnam was triumphant, and 406 Collins Street is the family’s maiden purchase in Australia.
Wolman said the significant interest generated from the campaign highlights the fact there is still a lot of capital looking for a home.
“How often does a freehold with a prestigious Collins Street address become available? This property is what investors been waiting all year for.
“The market is hesitant, investors are looking for opportunities but as tough as the market is right now, once you are talking about a Collins Street building, all the investors will come out of the woodwork,” he added.
“When you factor in high construction costs of a new build, cost of capital, replacement value, buyers saw the potential to value-add to the asset,” said Wolman.
Highlighting the scarcity of a Collins Street freehold, prior to this sale, the property has changed hands only twice in the past two decades, in 2016 it sold for $23.1 million on a passing yield of 4.43% by local investor Dorian Ribush, who bought in 2006 for $14.6 million.
Historically known as the Atlas Assurance Building, Praemium House and Concept House, the 12-level office building comprises a net lettable area of 3,861 sqm including prime ground floor retail with a 2.5 star NABERS rating, on a 441 sqm site.
It is current leased to a diverse range of tech and marketing businesses with an income of $1,759,309 p.a.* (fully lease net income).
This is the first Collins Street freehold sale and it is the second CBD transaction this year, coming hot on the heels of 333 Queens Street, which transacted last month for $35 million. That campaign saw more than 200 buyer enquiries, 36 private inspections and 8 formal offers submitted, with bidders from China, Singapore, Hong Kong, Malaysia and Australia.
This year has seen a lack of deals across the commercial property sector.
In a recent APJ Talking Property podcast, MSCI Pacific head of real estate research Benjamin Martin-Henry said transaction volumes hit the lowest level since 2011 with sales of industrial, office and retail assets all slumped in the first half.
