Commercial property boom rolls on with major Brisbane deal
The commercial property boom shows little sign of abating despite the chill winds ripping through housing and shopping centres with a series of record-breaking office deals being struck just head of Christmas.
The big factor driving the value of office towers ever higher is demand from cashed up global institutions as pension funds chase alternatives to volatile world sharemarkets and demand from tenants for space near stations and fashionable precincts.
The major movers this year have included offshore groups looking to park capital, like the Hong Kong billionaires that have bought in Sydney and Melbourne at prices their local rivals can’t match, but also more lasting players like Canada’s Oxford Properties Group that picked up the $3.4 billion Investa Office Fund.
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In a sign it remains committed to this market, Blackstone, that was outbid in that contest, has yet again forged into the Sydney office market, finishing the year as it began by picking up a big tower.
The US private equity house has just bought a half share of an $800 million office block in Margaret St in Sydney’s central business district.
Blackstone bought the stake from Hong Kong-based PAG and will again be working with co-owner Mirvac, with which it has struck other transactions.
The deal reflects how it is teaming up with local groups to boost its exposure to the strongly-performing city market.
The US group will likely help Mirvac position the complex for a revamp to match the overhaul of the nearby $2 billion Wynyard Place being undertaken by Canadian giant Brookfield, which has AMP Capital as its partner.
The transaction also puts the rise of Sydney’s office market on display as it is lucrative exit for PAG that picked up the half interest in the 60 Margaret Street property in 2015 from superannuation fund MTAA Super for just over $300 million.
It has benefited from some repositioning and the area’s rejuvenation, including from the light rail and new projects, including a $1.5bn office and hotel complex mooted by Justin Hemmes.
The property Blackstone is buying comprises both the city’s sixth-largest office tower and the MetCentre at the foot of the building.
The off-market sale was handled by Ian Hetherington, Ben Azar and Tim Grossman of Savills.
Blackstone and Mirvac until this year they co-owned Westpac Place at 275 Kent St. The US group sold its half stake in that $1.7bn tower this year with Mirvac assigning the interest to ISPT.
Blackstone is not the only group capitalising on Sydney’s attractive dynamics. Yesterday, British group M&G Real Estate teamed up with the wholesale funds arm of Investa Property Group to take a stake in Coca-Cola Place in North Sydney in a deal valuing the entire building at about $440m.
Local property fund managers are also buying at the less glitzy end of the scale in markets they believe have good growth prospects with Charter Hall and Cromwell picking up buildings as far afield as Hobart and Townsville in deals worth more than $120 million.
This article originally appeared on www.theaustralian.com.au/property.
