Office assets prove irresistible to investors as sales top $1b

More than $1 billion of office, hotel and retail assets have been bought by overseas investors in the past six months, including in joint ventures, proving that the stable economy is a drawcard for international investors.

The sales have come from China and Europe and the inflow is expected to continue to remain strong for a range of properties, with a focus on city offices that can be converted to apartments.

There are suggestions several Chinese buyers are looking at 4 Bligh Street and AMP’s 338 Pitt Street. Aside from the pending sale of 52 Martin Place to REST Super Fund, other assets on the market include GIC Real Estate’s 175 Liverpool Street, worth $450 million, and the Dexus Property Group and Perron Group co-owned 201 Elizabeth Street, worth $350 million. The latter two are considered residential conversion plays.

There is also the potential sale and probable lease-back of the four David Jones department stores.

According to the latest data from Colliers International, Australia is still a preferred destination for offshore and domestic investors as new groups enter the market – despite some predictions that capital could begin to depart Australian shores.

Nerida Conisbee, Colliers International national director of research, said between 2007 and 2012, the commercial property transaction landscape was dominated by offshore investors.

Ms Conisbee said she found that while a lot of attention had been paid to the volume of offshore dollars still to land here, Australian institutions made a remarkable comeback last year, becoming net buyers of commercial property for the first time in this property cycle.

”While institutions and offshore groups were net purchasers overall in 2013, not all of these groups are in acquisition mode,” she said.

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