Melbourne, 30 March 2014 – Chinese investors are setting their sights on Melbourne’s commercial property market, with office assets emerging high on the radar of buyers.
CBRE City Sales Senior Manager Tom Tuxworth said there was strong interest from Asian buyers looking to make a foray into Australia’s commercial property market.
Highlighting the increased activity in Melbourne’s office market has been the complete sell-down of 140 East – formerly the original Hoyts Cinema Centre – in the CBD.
Located at 140 Bourke Street, the office tower comprises 28 fully refurbished whole and half floor commercial offices – all of which have been sold during the two-year campaign.
Mr Tuxworth said the building presented an attractive investment opportunity and had attracted interest from a range of buyers.
“The majority of buyer interest and subsequent purchases have been made by Chinese investors, SMSF investors and small to medium sized business looking to capitalise on the low interest rate environment,” Mr Tuxworth said.
“We are extremely pleased with this successful result, which has seen all offices in the building sold within two years.”
CBRE negotiated all 28 sales within the building on behalf of the vendor Drapac. The building’s sell-down marks Drapac’s departure from the Melbourne market, with the firm moving to the US to establish a funds management business.
Drapac Chief Operating Officer Costa Alexiou said the company had taken a creative and proactive approach to an asset that had originally presented a number of challenges.
“The risk associated with developing this asset and selling it down as individual strata offices has been totally justified by the superior returns we were able to achieve,” Mr Alexiou said.
“When you compare the results we achieved to selling the asset as a single building, our strategy has proven to be highly successful.”
Mr Tuxworth said Drapac had effectively executed a strategic office development that delivered a premium product in Melbourne’s office market.
“Before 140 East, there was a real gap in the Melbourne market for strata office products, specifically for owner-occupiers,” Mr Tuxworth explained.
“This office tower presented a high quality product that appealed to buyers looking to upgrade their current office space.”
Notable transactions within the building include Burgess Rawson’s acquisition of the entire seventh floor for $2.8 million in December last year and API Leisure & Lifestyle’s purchase of an eighth floor suite for $1.34 million.
The AFX Group purchased the eleventh floor and associated air-rights for a combined price of $4.08 million.
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