Europe comes calling for South Wharf Tower

29th Jan 2016
Adrian Ballantyne

German institutional investor Bayerische Versorgungskammer has bought Melbourne’s South Wharf Tower at Docklands, in the first direct acquisition by CBRE Global Investors and Universal-Investment.

CBRE Global Investors made the purchase for an undisclosed sum on behalf of the German pension fund  and will now manage the property, which features 21,000sqm of lettable office space.

Revealed: Who’s buying Australia’s commercial property?

Fellow German property fund Deka-ImmobilienGlobal bought the 11-storey property on the banks of the Yarra River for $115 million in 2010 and put it on the market in mid-2015.

It is understood the new sale price represents a significant premium on the 2010 deal.

Client demand to invest in Australia continues to be strong, which is consistent with our research view that domestic real estate markets will outperform on a global, risk-adjusted basis

The tower returns annual rents of more than $10.6 million per year and houses blue-chip tenants including Mondelez International (formerly known as Cadbury and Kraft Foods), LeasePlan, ANL Container Line and the Lend Lease-owned Baulderstone.

CBRE Global Investors Australia managing director Andrew Glass says overseas investors are continuing to recognise the value in Australian commercial property.

“We are pleased to have secured South Wharf Tower for BVK as part of their global investment mandate,” Glass says.

“Client demand to invest in Australia continues to be strong, which is consistent with our research view that domestic real estate markets will outperform on a global, risk-adjusted basis.”

Melbourne's South Wharf Tower has sold to German institutional investor Bayerische Versorgungskammer

Melbourne’s South Wharf Tower has sold to German institutional investor Bayerische Versorgungskammer

The sale comes as new research shows Melbourne and Sydney rank behind only London as the top targets for foreign commercial property investors in 2016.

Colliers International’s Global Investor Outlook found that despite being small markets compared to foreign heavyweights New York and London, Australia’s two largest cities are set to be the second and third-most sought after targets among overseas investors in 2016.

The Asian Pacific area is next to U.S. currently one of the preferred real estate markets abroad

“Sydney is considered a global gateway city so for investors it ranks up there with New York, London, Singapore and the like in terms of being an attractive destination for investment,” Colliers managing director of capital markets and investment services John Marasco says.

Overseas money: Sydney, Melbourne lead pack for Asia-Pacific demand

“Melbourne is not far behind and is seen as a good alternative to Sydney.”

Universal-Investment managing director in charge of the real estate division Alexander Tennenbaum agrees Europe is increasingly looking towards the Asia-Pacific for investment opportunities.

“German institutional investors are still internationalising their real estate allocations. The Asian Pacific area is next to U.S. currently one of the preferred real estate markets abroad,” Tennenbaum says.

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