Aussie office tower sales top $20bn for first time

An Adelaide office tower sold for more than $100 million was one of the year’s major deals.

The sales of Australia’s office towers reached nearly $22 billion last year, the first time the transaction tally has breached the $20bn mark, according to Colliers International.

More than half the deals were struck with Australian buyers. Canada’s Oxford Properties topped the year in its $3.4 billion deal on Investa Office Fund.

It was the fifth year that office sales were more than $15bn, and last year’s figure is a 15% increase on 2017 investment levels, Colliers’ capital markets office investment review found.

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Institutional investors made up 77% of the buys and 69% of the transaction value. Private investors were net sellers of $1.77 billion of buildings.

Many investors are still seeking Australian investments, Colliers international managing director of capital markets John Marasco says.

“Continued strong demand in Sydney and Melbourne, coupled with improving demand in Perth, Adelaide and Brisbane means we expect ongoing yield compression and rental growth will be the driver for office capital value growth across most markets in 2019,’’ he says.

By December, office markets had recorded 27 consecutive quarters of tightening capitalisation rates, starting in June 2012, says Colliers national research director Anneke Thompson.

“In 2018 we recorded the lowest level of compression since mid-2014, indicating that this cycle is nearing its end,” Thompson says.

Colliers expects growing investments in emerging asset classes and markets this year.

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