Philip Hopkins August 11, 2012
COMMERCIAL property in the Melbourne CBD is still enticing buyers, whether in the $1 million-to-$20 million range, or the strata office sector. Low interest rates and the potential for rental and capital growth are key drivers.
Daniel Wolman, Colliers International executive, CBD sales, said investment properties in prime locations had continued to sell well over the first six months of the year, with strong sales results likely in the second half.
''We are receiving significant interest from the Asian market and local investors are also still active. Owner-occupiers are actively buying strata office space through self-managed super funds,'' he said.
Colliers figures show there have been 19 sales in the $1 million-$20 million price range in the first half of the year. These included five free-standing buildings, eight strata retail properties and eight strata offices, totalling $67 million in sales.
Savills' Victorian head of research, Glenn Lampard, said private investors in the strata office sector had bought 42 properties worth more than $26 million in the past year.
Colliers said two key transactions were the sale of 64 square metres at 220 Collins Street (leased to Telstra) for $9,250,000-$9,350,000 on a yield of 5.9 per cent; and the sale of 104 square metres at 217 Elizabeth Street (leased to Camera House) for $5,632,000 on a yield of 3.9 per cent.
Savills directors Nick Peden and Clinton Baxter have sold whole floors on level 5 at 171 La Trobe Street and on level 10 at 313 La Trobe Street in recent weeks for $1.6 million each after deadline private sales. Interest from private investors and owner-occupiers had been huge.
''These are the highest levels of inquiry we've experienced for some time for this type of property and it's on the back of two recent interest rate cuts with the likelihood of a stable outlook on rates, and also the potential for capital and rental growth,'' Mr Peden said.
In the latest deal, level 10, 313 La Trobe Street - a 500-square-metre full floor with a three-year lease in place - sold on a 7.82 per cent yield. The 171 La Trobe Street property, comprising a 434-square-metre whole floor with a leaseback to January 2013, was sold at a new record square metre rate ($3686) for the building. Both properties sold to private investors.
Mr Baxter said buyers were motivated by the relatively rare offering of some high-quality properties with strong fundamentals. The relatively short lease profiles had not been a concern given the growth potential.
Mr Baxter said the strata office market had historically been popular among investors and owner-occupiers due to the accessible entry price and attractive investment yields. He said the prospect for rental and capital growth also made the sector attractive.