Overseas investors swoop on Sydney office opportunities
Sydney office buildings are proving the surprise packet of the coronavirus crisis, with deep-pocketed offshore investors and local private buyers looking to snap up at least $500m worth of office blocks.
The purchasing is a counterpoint to dire predictions about the future of office buildings and buyers are targeting assets with long leases or the potential to be repositioned.
Purchasers have also spread their wings to areas including Macquarie Park and North Sydney. Both markets are perceived to be beneficiaries of the pandemic as fewer workers are going into the CBD every day.
In one of the city’s largest suburban deals Singaporean powerhouse CapitaLand is targeting the purchase of an office complex in Macquarie Park from an AMP Capital-run fund for about $300m. It was put on the block by AMP Capital’s Diversified Property Fund, which has been selling off assets, even as it fields a takeover approach from Dexus.
CapitaLand is looking to purchase the campus-style development of three buildings. The parties and agents Knight Frank and Colliers International declined to comment.
The impending sale has put the strength of metropolitan markets on display and will also give confidence to developers who are active in the area.
Closer to the CBD Charter Hall is close to offloading a North Sydney tower to a local company for about $200m.
Sydney-based manager Intera Group is in talks to buy the tower at 65 Berry Street, capitalising on its position adjacent to the new Victoria Cross Metro Station.
Intera is a long-term believer in office property and has a portfolio of A-Grade office and industrial buildings across the Sydney metropolitan markets, and is already invested in North Sydney.
The 18-level building is well positioned in the new centre of the CBD. The A-grade tower spans 14,503sqm was built in 1986 and refurbished in 2017.
In a sign of the active market, an unsolicited offer is understood to have been made for the asset, with the compelling price encouraging the fund manager to grant the buyer a short time to exchange contracts.
The deal reinforces the interest in suburban markets that are offering steady returns. Last week, Hong Kong’s Huge Linkage bought a $273m block from Dexus and the billionaire chairman of Western Sydney Wanderers Paul Lederer snapped up another North Sydney tower in Berry Street for about $54m.
The next big test will come as US funds manager Nuveen offers a half-interest in North Sydney landmark 101 Miller Street and Greenwood Plaza, worth about $500m, via Knight Frank and Colliers International.
The sale of the office blocks is in keeping with pre-crisis pricing, and experts said the top echelon of commercial properties are attracting strong bids.
Leasing conditions are expected to worsen before they get better. But there is still a strong flow of capital from Singaporean companies and international funds which see Australia as a relatively strong market where they can buy at a time when other markets like Europe and the US are more risky.
This article originally appeared on www.theaustralian.com.au/property.
