Singapore groups to cash in on Sydney CBD demand

Roxy Pacific and Tong Eng. are selling 117 Clarence St in Sydney.

A pair of Singaporean groups, Roxy Pacific and Tong Eng. Group, are set to become the latest owners to cash in on Sydney’s office boom as they bring a Clarence St building to market that could sell for than $160 million.

They picked up the asset in the central business district in an $81 million play in 2015 but since then rents have jumped as office buildings been taken out of the market for apartment conversions.

The construction of the Sydney Metro is also driving demand for B-Grade office space across the Sydney CBD, putting the 12,521sqm complex in a strong position to benefit from rental increases.

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Inc Re and Savills are handling the sale and the latter firm’s research points to a spike in rents, coupled with limited opportunities to purchase investments, as driving yields down for B-grade assets.

Sydney’s western corridor is being overhauled with the precinct drawing in financial services groups as the area around Wynyard station is transformed.

The 11-storey tower at 117 Clarence St occupies a large corner site of about 1231sqm and has undergone a series of capital upgrades.

It has a short weighted average lease expiry of about 2.6 years by income allowing for either rental increases or for a buyer to undertake a larger amalgamation with adjoining owners.

Simon Fenn, Ian Hetherington and Ben Azar of Savills and Richard Butler, Josh Cullen and Steven Kearney of Inc RE are handling the sale.

Mr Fenn said the building offers significant future rental rises and had long term development potential. He tipped it would attract strong interest from both domestic and offshore capital.

Mr Butler said the property sat between Brookfield’s massive Wynyard Place redevelopment and Barangaroo and noted it could be redeveloped in the next cycle.

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