Melbourne office towers among Australia’s hottest property
Melbourne office towers have become among the hottest properties in the country with a series of new deals rerating the market as global buyers look to access the rental growth forecast to turbocharge the market in coming years.
The city’s skyscrapers are drawing fresh capital as buyers believe they will be able to wring more value out their purchases than in many other Australian and international cities, despite yields falling below 5 per cent.
In the largest deal, Mirvac is splitting the sale of two premium Melbourne towers between separate buyers, with Singapore’s ARA Asset Management in line to pick up a half-share of the Olderfleet at 477 Collins St office development.
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ARA acts for a host of listed and wholesale capital funds and senior sources suggested the holding may be destined for the Singapore-listed Suntec REIT.
The manager has declined to comment ahead of finalising a deal worth about $420 million that displays a yield of about 4.75%.
Mirvac is redeveloping the building into a 55,000sqm, 40-storey, premium office tower. It won Deloitte as an anchor tenant last year.
The Australian can reveal US giant Morgan Stanley Real Estate Investing is also targeting the purchase of a half stake in Mirvac’s redevelopment of 664 Collins St. That interest is likely to change hands for about $140 million, again at a yield of under 5%, reflecting precommitments from accounting firm Pitcher Partners and ExxonMobil.
The deals are in keeping with Mirvac’s model of winning leasing precommitments, developing ultra-modern buildings and drawing in heavyweights as capital partners.
The company has previously sold interests in projects to Singapore’s K-REIT, AMP Capital and SunSuper.
Real estate agencies JLL and Colliers International handled the campaigns but declined to comment.
The demand for Melbourne office buildings extends beyond the mega-towers.
In a separate play, fund manager CBRE Global Investors is poised to buy a Spencer St office block from investment house Anton Capital for close to $240 million.
The purchase is being struck just over a year after Anton bought the tower from Melbourne property magnate Harry Stamoulis for $165 million.
The leap in value of the tower at 120 Spencer St, near Southern Cross station, is also symptomatic of rocketing commercial property values. The deal is being brokered by CBRE.
This article originally appeared on www.theaustralian.com.au/property.