Sydney dominates as investors circle office investment opportunities
Sydney dominated office sales activity in Australia last year, accounting for almost half of the nation’s $16 billion in office transactions according to new CBRE research.
29 Jan 2018
The CBRE data points to another bumper year for office sales, with last year’s national tally eclipsing the $15.37 billion in deals achieved in 2016 and tracking well above the 10-year annual average of $10.9 billion.
CBRE’s NSW State Director, Capital Markets, James Parry said a strong uplift in Sydney office rents had underpinned continued interest in core and value-add investment opportunities.
“Rental growth in Sydney has outperformed the country over the past two years and this has driven strong demand and sharper pricing,” Mr Parry said.
“This was particularly in evident in Q4 when $1.6 billion in Sydney office transactions were concluded, including 231 Elizabeth Street ($350m), 130 Pitt Street ($229m), 1 Castlereagh Street ($218m), 20 Hunter Street ($190m) and 50 Pitt Street ($165m).”
Mr Parry noted that foreign purchasers represented 60% of the total transaction value and purchased five of the six sales over $100 million.
“Equivalent yields for a number of these sales were in the 4.65%-4.85% range – representing an historic low,” Mr Parry said.
“This highlights the continued strong demand for Sydney CBD office stock, with that momentum expected to continue in 2018, underpinned by both local and offshore investor interest.”
CBRE Associate Director, Research, Felice Spark said Brisbane was the other standout office market in Q4, recording $1.1 billion in sales - the highest Q4 sales volume since 2007.
For full year 2017, Brisbane office sales totaled $3.11 billion – up $1 billion on the previous year.
“Brisbane’s strong performance was driven by a surge in foreign investment, with sales volumes attributed to foreign purchasers more than doubling and accounting for 45% of total sales,” Ms Spark said.
“Positive economic indicators and strengthening white collar employment are expected to drive an increase in effective rental growth in 2018 and countercyclical plays are now evident as buyers look to capitalise on the improving market conditions.”
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), 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 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 450 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.