Office values yet to peak: Dexus
The worth of Australia’s prime office towers has not yet peaked and will continue to rise over the next year, according to Dexus chief executive Darren Steinberg as the landlord posted a $405 million or 3.1% lift in values for the half year across its office and industrial portfolio.
The group, which manages a $27.7 billion property portfolio, saw its shares rise 11 and a half cents to $11.095 in early afternoon trade.
Unquenched demand for property with solid income from global and local investors was still driving sales and prices across the capital cities, Steinberg says.
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“Taking this dynamic into account along with the current yield spread over the bond rate, we believe there is still an opportunity for capital values to increase further over the next 12 months.”
Dexus owns and manages office buildings around the country saying the majority of the rise in its office values was due to a further tightening of yields and rental growth in Sydney, where there has been little new development.
Its MLC Centre in the Sydney CBD saw a $27.8m rise in value on the back of increased rents and a 12.5 basis point sharpening in the capitalisation rate of the office tower component.
Dexus’s development 100 Mount St in North Sydney, which is nearing completion, posted a lift of $33.1 million following new leases and a 12.5 basis point tightening in the property’s capitalisation rate.
The group had 108 of its 112 properties — 46 offices and 62 industrial buildings — revalued as at December 31. The uplift will add 40 cents to its net tangible asset backing.
The weighted average capitalisation rate across the portfolio tightened 16 basis points over the last six months to 5.36%.
This article originally appeared on www.theaustralian.com.au/property.
