Savills IM locks on to Fortitude Valley tower

Savills Investment Management has snapped up the HQ South Tower in Brisbane’s Fortitude Valley from M&G Real Estate for about $110m.

International investment manager Savills Investment Management has forged into the Brisbane office market, picking up the HQ South Tower in Brisbane’s Fortitude Valley from M&G Real Estate for about $110m.

The deal on 520 Wickham St comes after a relatively quiet period for the city’s office market when a series of assets for sale did not trade.

But the drought is breaking. The city is seeing a lift in year-end deals with global giant Hines a chance to sell a block at 260 Queen St.

Global and private capital is paying up for quality properties, even though large real estate investment trusts are all but out of the market.

British fund M&G picked up the tower in 2017 in what was its first Brisbane acquisition in a $119.1m purchase from the Swiss AFIAA Foundation for International Real Estate Investments.

The 8-storey office tower is one of two towers in the overall 38,500sq m Brisbane office development. AFIAA bought it in 2010 for $95m on a yield of about 7.5 per cent.

Savills Investment Management has bought the HQ South Tower in Brisbane’s Fortitude Valley from M&G Real Estate for about $110m.

HQ South occupies a 3,017sq m site with frontage to Wickham St and Brookes St and is well-connected to transport and some of Fortitude Valley’s top destinations. The tower has a divisible 2,250sq m in floorplates with a central core configuration, natural light, and a 6-star Green Star design, NABERS 5-Star Energy Rating and 4-Star Water Rating.

CPB Contractors, the Australasian arm of the CIMIC Group is the main tenant, occupying about half the 14,588sq m complex, with the majority of the lease running through to mid-2026.

It is reportedly shifting into the final portion of the Hamilton Harbour development, on a 10-year lease after practical completion.

The Fortitude Valley asset is still keenly-sought. Other office tenants include RPS Australia, AH Jackson & Co and the Next Medical Practice.

Knight Frank’s Justin Bond and Paul Roberts and CBRE’s Peter Chapple and Bruce Baker brokered the deal.

HQ South is billed as holding good medium-term lease rental income with an exposure to Brisbane’s infrastructure boom leading up to the 2032 Olympics, and marked a major core-plus sale for the year.

Savills IM said this month it had completed its initial investments in the office and residential sectors in Japan, as well as buying a local triple anchored supermarket neighbourhood shopping centre in WA for its flagship pan-Asian fund, in a series of off-market transactions.

Savills IM acquired 75 per cent of Forest Lakes Shopping Centre in Perth, with Perth retail operator Greenpool Capital, taking the remaining interest, with property trading for $81.5m.

The fund, launched in December 2020 also holds an office building in Sydney and a centre in Toowoomba in a portfolio of 18 properties.