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Dr. Mark Sinclair
Dr. Mark Sinclair, Mentor Education

CBD Office sale soar beyond expectations in 2013

31 December 2013

After commentators had predicted weak fundamentals for office markets in 2013 investors have proven the naysayers wrong.

Figures from Savills have indicated that sales reached $12.4 billion over the calendar year – up 92 per cent on 2012. Offshore and institutional funds, including listed property trusts (Australian real estate investment trusts) were the most active in 2013 accounting for nearly a third ($3.8 billion) of the sales transacted. Private investors were also busy, accounting 53 purchases 53.

Ian Hetherington Savills national capital transactions said that, “the increase in activity is in direct reference to increasing confidence and the historically high spread between yields and debt.”

The market was led by DEXUS Property Group in 2013 who spent close to $1 billion in April to acquire the Perth office development Kings Square from Leighton Holdings for $434.8 million and Grocon’s office tower development at 480 Queen St in Brisbane for $543.9 million.

Other big ticket sales included: ASX-listed Investa Office Fund and Investa Commercial Property Fund who jointly acquired Leighton Properties’ 567 Collins St premium grade office development in Melbourne for  $462 million.

Tony Crabb, Savills national head of research, said that “despite doomsayers predicting weak fundamentals for office markets the asset class remains the favoured repository for domestic and offshore professional investors. A record year of sales turnover in a business environment classified as tough shows the mismatch between sentiment and investment market reality.”

NSW recorded the majority of transactions with $4.7 billion of office transactions, while Victoria accounting for approximately $2.5 billion of office transactions.

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