Record first half for Sydney as investors target office investment opportunities
Sydney has recorded its highest ever start to the year for office property sales, with $4.4 billion in assets changing hands according to new CBRE data.
31 Jul 2019
CBRE’s Q2 Office MarketView report highlights that Sydney and Melbourne were the two most active markets in the country in the first half of 2019, as investors continued to seek out office investment opportunities.
A total of $8.5 billion in office property changed hands nationally during the six-month period – up 21% on the previous corresponding period.
“Volumes were better than expected, registering the strongest start to a year on record as despite the tightly held nature of the major CBD markets, and the difficulty in recycling capital, owners have been willing to sell for the right price,” CBRE’s head of Capital Markets research, Ben Martin-Henry, said.
“This has resulted in further yield compression across all major markets to a national average of 5.2% for prime stock.”
Mr Martin-Henry noted that the RBA’s announcement of two, 25bps rate cuts since the Federal election meant that investors were now capitalising on rates of sub 3%, which was expected to drive further compression in property yields.
From a Sydney perspective, the $4.4 billion sales tally in the first half represented a 40% increase on H1, 2018.
CBRE Capital Markets Director Michael Andrews said the average price paid at ~$156 million was the highest on record, illustrating the premiums being paid by investors to secure available assets.
Partially driving the strong result was Scentre Group’s $1.52 billion disposal of the 299-year leasehold office towers above Westfield Sydney to Blackstone.
“However, while volumes have been high this half, the total number of sales and the current availability of stock to purchase is much lower that we have witnessed previously,” Mr Andrews noted.
“Tighter yields are being driven by aggressive and available debt enhancing levered returns for investors. We see this as one of the catalysts to driving further yield compression.”For Australian/international news or global stories, follow us on Twitter: @cbreaustralia
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at https://www.cbre.com.