Demand drives $330m East Melbourne office pre-purchase
The stiff demand for office assets around Australia has been put on display with Singapore-listed ARA Asset Management Limited teaming with QuadReal Property Group to pre-purchase an East Melbourne office block for about $330 million.
The pair have unveiled their joint acquisition of 200 Victoria Parade in East Melbourne, saying they have set up a joint venture to acquire and manage investments in office and logistics in Sydney and Melbourne.
The acquisition of the building that will be built at 200 Victoria Parade is a marker of the heat in the local property market. The move was flagged by The Australian last month.
Time & Place founder Tim Price says the deal reflects the current state of the commercial market and appetite from global investment funds.
“There has been a significant trend outbound from the CBD by both tenants and institutional investors in recent years as lack of supply has shifted the focus to Melbourne’s CBD fringe,” he says.
Price says this has presented an opportunity for developers to capitalise on this scarcity by securing well-located sites and building premium-grade commercial assets on the Melbourne CBD’s doorstep.
“We received an overwhelming response to the expression of interest campaign and are both pleased and proud to enter into partnership with a global powerhouse like ARA to fund and own the asset on completion” he says.
The developers last June brought in JLL’s Nick Rathgeber and Leigh Melbourne to manage an investment process for the project.
The building will sit next to Melbourne’s government precinct, with the A-grade office project to be completed in the third quarter of 2022. The proximity to the CBD is expected to attract top grade tenants.
The large floor plans are especially designed for government and corporate tenants with large space requirements. The block is targeting 5.5 Star NABERS Rating and a 5 Green Star rating.
QuadReal managing director of Asia Peter Kim says Melbourne is a key focal point of the company’s global cities strategy.
“Our Victoria Parade investment represents a lot of what we like about this market — from the asset’s uniquely large floor plates to the best-in-class environmental sustainability initiatives that we have planned for the building,” he says.
ARA Australia chief executive David Blight says the Victoria Parade project represents an “exciting opportunity” to secure a strategic foothold in a prestigious location, and he flagged “many more” projects.
QuadReal Property is the real estate arm of British Columbia Investment Management Corporation and is one of a suite of North American investors making the running locally.
The play expands the Canadian group’s reach, which includes a stake in a Sydney office tower and a project in London with Unibail-Rodamco.
QuadReal already had exposure to Australia via a separate joint venture with ARA. Locally, QuadReal and local real estate investment trusts Charter Hall and Abacus last year joined forces to acquire a Sydney office tower overlooking Hyde Park for $630m.
The Canadian group also backs an India logistics joint venture between pan-Asia logistics group Logos and India’s Assetz Property Group.
The East Melbourne site was assembled by developers Golden Age, led by Jeff Xu, and the private Time & Place. ARA and its partner will fund and then own the planned A-grade development.
The move also demonstrates ARA’s ongoing focus on direct property acquisitions and management after it supported a bid by Gary Weiss for a board seat at Cromwell Property Group.
This article originally appeared on www.theaustralian.com.au/property.
