Investors vie for piece of Melbourne office pie
Offices are piquing the interest of investors keen on Melbourne’s CBD strata market, with values rising up to 30 per cent in the past 18 months, according to CBRE.
Yields of about 8% are tempting buyers into office investments, CBRE strata projects negotiator Tim Last says.
“The steady uplift in values is a further motivator for investors to buy and take advantage of this growth, which has seen some assets gain in value by as much as 30%,” he said.
“CBRE’s strata projects team has had a record-breaking first half to 2015, with over 26 transactions … a trend that is expected to continue throughout the second half of 2015 and into 2016.”
In some of the latest deals, a private investor who sold two CBD strata offices — Level 10, 313 La Trobe St, and Level 5, 171 La Trobe St — collected in excess of $2 million for each after having owned the sites for just three years.
Mr Last says both sites sold for between 20% and 30% above the purchase price.
CBRE says there is a lack of strata office supply in the CBD, leading to buyers willing to pay premium prices.
With the rising investor and occupier demand for strata office spaces, developers are increasingly aiming at this market sector for expansion.
One such example is Sullivan Property’s New York-style office development at 517-535 Flinders Lane.
More than 95 per cent of the development has been sold at prices in excess of $6000 per square metre.
Private offshore investor Li Ping bought into the development.
“The site is a long-term investment that I plan to lease out in the short term,’’ Ping says.