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.

The Edition, on Flinders Lane, sold in May.

The Edition, on Flinders Lane, sold in May for more than $2 million above its sale price three years ago

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.

This story was originally published on the Herald Sun.