Dexus rides wave of demand to soaring property values
The Dexus Property Group will book a $754 million lift in property values for the 2016 financial year as leasing successes and the wave of investor demand continue to stoke commercial property markets.
Dexus chief executive Darren Steinberg expects capitalisation rates for commercial property to tighten further as leasing conditions improve in Sydney and Melbourne and investors chase yield.
“A lower-for-longer interest rate environment and the continued investor demand for the defensive nature of well-leased quality properties should see further support for real estate valuations as we move into FY17,” Steinberg says.
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The diversified property group, whose shares hit an all-time high of $9.285 before closing at $9.22 on Wednesday, posted a $220 million or 2% rise on its 111 properties for the six months to June 30. For the full year, values will rise by 7.4%.
However, the rate of value growth is expected to slow, Steinberg says.
The weighted average cap rate for the portfolio tightened by 55 basis points to 6.33% for year, with a 17 basis point fall during the past six months, the company says.
The group’s new 480 Queen St office tower in Brisbane recorded a $45 million or 15% lift in value with the capitalisation rate dropping 62 basis points to 5.88%. The external valuation of seven Sydney CBD office towers saw values rise $88 million, or 5.5%.
This article originally appeared on www.theaustralian.com.au/property.