Brisbane office buyers lured back by rising rents

Diversified property player Kyko Group is said to be targeting 201 Charlotte St, Brisbane, for more than $130 million.
Diversified property player Kyko Group is said to be targeting 201 Charlotte St, Brisbane, for more than $130 million.

Brisbane’s office tower market is gathering pace with a run of purchases under way showing that investors are keen to capitalise on the city’s rising rents and heavy infrastructure spending.

Big players Growthpoint, Charter Hall and M&G are already in the market, and now Singaporean group ARA Asset Management and probably local player Kyko are bolstering their holdings.

ARA has just unveiled the $96.5 million purchase of 133 Mary Street in Brisbane’s mid-town precinct for one of its private real estate funds.

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It is now planning to launch a new tower on an underused part of the site that it picked up from exiting Canadian investor Quadra Pacific.

The North American group was a long-time owner in Brisbane but last month also sold 288 Edward St to a venture between US group Heitman and Marquette Properties for about $115m.

JLL’s Seb Turnbull and Luke Billiau brokered the deals that were flagged by The Australian last year.

ARA sees Mary Street as offering an attractive investment with additional value-add potential. The building sits on a prominent corner site with frontage to both Edward and Mary Streets, and is near Eagle Street Pier and the Golden Triangle.

There is a 15-level, B-Grade office block and a single-level retail building that can be redeveloped into a new A-Grade tower.

The site is near Brisbane’s Central train station and is well-positioned to benefit from plans to rejuvenate the city.

It is benefiting from a $7.5 billion pipeline of commercial, residential, hospitality and retail developments to be delivered via Brisbane Quarter, Queens Wharf and the proposed Brisbane Live and Waterfront Precinct.

ARA says it looks forward to enhancing the asset by developing a new tower to significantly increase the site’s net lettable area and capitalise on positive rental reversions in Brisbane’s office sector. The chief executive of ARA Private Funds, Ng Beng Tiong, says the acquisition allows the company to showcase its record in repositioning and transforming assets.

In one of the latest plays, diversified property player Kyko Group is targeting 201 Charlotte St for more than $130 million.

Kyko, which did not return calls, is one of the country’s top private property groups. It operates across the office, retail, residential and hospitality sectors, with the property suiting its active investing style.

The tower is being sold by Fortius Funds Management and two private funds run by BlackRock. The A-grade tower, in the heart of the Golden Triangle in Brisbane, stands 16 storeys and drew other local and offshore bidders.

Knight Frank and CBRE marketed the 13,291sqm property, which Fortius bought for $81.5 million in 2015, but did not comment.

Anchor tenant, resources company Anglo American, recently extended the bulk of its space in the building until 2028.

Elsewhere in the city, Brisbane’s former Wedding Cake building at 310 Ann St, which once housed Suncorp, is also attracting strong bids via JLL and CBRE.

The building, overhauled by Cornerstone Properties, that bought it for $63m in 2011, could sell for about $250 million.

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