Offshore investors in Melbourne shopping spree

A COLLINS St shop sold for a record $14.21 million as buyers snapped up $239.2 million of Melbourne commercial property from one agency in the past 10 weeks.

Savills Melbourne reports offshore investors – from Singapore, Vietnam, Mainland China, Hong Kong, Taiwan and Malaysia – bought 12 of the 15 properties sold, with a combined value of $209 million.

The three-level property at 254 Collins St – leased to the international clothing brand Kookai – sold to a China-based buyer for  $14.21 million, which Savills said was a record for a single retail shop.

Just days earlier a syndicate of investors from China bought the 388 Lonsdale St home of the Melbourne Institute of Technology for $20.5 million.

Savills’ Clinton Baxter said there is exceptional and growing interest from Asia in Melbourne’s commercial property.

“We are now selling approximately 70% of all commercial properties we offer to off-shore buyers,” he said.

“Off-shore buyers have a considerable competitive advantage over locals, particularly in their capacity to pay and cost of capital.

“With Australian banks unwilling to lend at competitive rates, off-shore buyers are snapping up prime properties offering compelling rental yields and growth prospects without the need for local financing.”

Mr Baxter said Melbourne is a preferred location thanks to its vibrant CBD, rapidly growing population and transparent planning processes.

According to Savills, Australian commercial property worth $20 billion changed hands in the 12 months to September – up 50% in a year.

Most of these were office sales, worth about $12 billion, and most were in the capital city CBDs.

“Australia’s commercial property investment markets are very healthy having posted a record year. Clearly the appetite is strong and there is a willingness on the part of vendors to meet the appetite,” said Tony Crabb from Savills National Research.