Melbourne office market in $1bn surge
Melbourne’s office market has burst into life with more than $1 billion worth of major towers in play as the city sets the early pace for capital markets this year.
In the largest move, Singapore-backed Frasers Property Australia has put a half stake in the $750 million Freshwater Place on the block, with GPT’s wholesale office fund in pole position to pick up the interest.
Meanwhile, a Hong Kong investment group has almost finalised its $315 million purchase of an office complex in Collins St, signalling that a new wave of offshore capital is preparing to chase Melbourne towers after relatively subdued conditions last year.
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Local and international property groups are also forming consortiums in order to prepare bids for QIC Global Real Estate’s 80 Collins Street development that is expected to sell for about $2 billion, with initial bids due at the end of next month.
The surge in activity comes as more capital seeks a home in Australia, looking further afield than the hot Sydney market where more than $5.15 billion worth of office towers sold last year.
The Frasers asset at 2 Southbank Boulevard, Freshwater Place, could be among the first deals to be struck this year as the building’s co-owner, the GPT Wholesale Office Fund, could look to add to its $7.5 billion portfolio of east coast office towers.
GPT is separately in talks over another co-owned building, Sydney’s MLC Centre, where it has put its half stake on the block. Dexus has pre-emptive rights and is considering buying the other half of the building in a deal that could be worth about $800 million.
The Frasers disposal in Melbourne follows a repositioning of the Southbank property that sits on Melbourne’s Yarra River. The A-grade office building comprises a 38-storey tower and eight podium levels spanning about 55,000sq m.
Building works and a releasing campaign over more than 22,000sqm recently undertaken by the co-owners have boosted its value. It has strong tenant roster including Apple, Microsoft, CUB, WPP and Kraft Heinz.
Frasers predecessor Australand developed the building in 2005 and kept a half stake, during which time it also managed the asset and lifted its environmental ranking. It now sports a 6-star Green Star (Performance) rating and has a 5.5-star NABERS building energy rating with green power.
Frasers Property Australia chief executive Rod Fehring says the repositioning and re-leasing project has set rental benchmarks.
“This asset has been a great and consistent performer within our portfolio. Frasers Property is putting its interest in the asset on the market as part of our ongoing capital management program,” Fehring says.
Frasers Property is being advised by agents JLL and CBRE.
Meanwhile interests associated with Hong Kong’s Foo Hang Jewellery have all but wrapped up a deal to buy a major Collins St tower for about $315 million from South Korea’s National Pension Service, represented by US firm PGIM Real Estate.
The 17-storey building, completed in 1984, has 31,778sq m made up of two interconnected office towers, three shops and 145 basement car spaces. JLL and CBRE also brokered that deal but did not comment on the deal’s crisp yield of close to 5%.
Founded in 1944, Foo Hang Jewellery was one of the first companies to import diamonds directly to Hong Kong from Israel and South Africa, and has become a premier jewellery wholesaler, retailer, manufacturer and exporter.
This article originally appeared on www.theaustralian.com.au/property.
