capital markets investment review 2016
TRANSCRIPT
Accelerating success.
2015/16
O F F I C ECAPITAL MARKETS INVESTMENT REV IEW
VALUATION OUTLOOK
34 INVESTMENT OUTLO OK
35
CONTENTS
03
DETAILED TRANSACTION LIS T
42
INTRODUCTION
04
OFFICE EXPERTS
KEY FINDINGS
06 YEAR IN REVIEW
5 MARTIN PLACE, SYDNEY: Colliers
International exclusive leasing appointment
on behalf of Cbus Property and DEXUS
Property Group.
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OFFICE EDITION
10 TRANSACTION TRENDS
14 OFFICE FORECAST INDICATORS
16 MAJOR TRANSACTION OVERVIEW
23 CASE STUDIES
23 77 KING STREET, SYDNEY, NSW
24 SOUTHERN CROSS, MELBOURNE, VIC
25 179 ELIZABETH STREET, SYDNEY, NSW
26 41 GEORGE STREET, BRISBANE, QLD
27 COMO CENTRE, SOUTH YARRA, VIC
28 AVIATION HOUSE, CANBERRA, ACT
29 NZ OFFICE OVERVIEW
32
ANNEKE THOMPSON
NATIONAL DIRECTOR
RESEARCH
DWIGHT HILLIER
MANAGING DIRECTOR
VALUATION & ADVISORY SERVICES
INTRODUCTIONThere is little doubt that the Australian o�ce investment market is still very
much in the grips of a yield compression cycle. Over the year to June 2016,
Sydney CBD Core Prime Grade yields have compressed by 44 basis points to
5.50 per cent, and Melbourne CBD Prime Grade yields by 69 basis points to
5.60 per cent. The Australian capital city CBD average compression rate was
41 basis points. This is the sixth year of the cycle, with yields starting to
compress in most capital city markets in mid 2010, albeit slowly for the �rst
three (3) years. It is really since capital returned strongly to the market in the
2014 �nancial year, and in particular global capital, that yields have
accelerated downwards.
Our O�ce Investment Review discusses what our outlook is for this cycle over the next year.
In our opinion, the key drivers of continued capital �owing into our markets (and therefore cap rate
compression) is population growth, and speci�cally where this growth is happening, supply side
growth, including infrastructure, as well as positive return metrics when benchmarked against the
rest of the world. Some global geo-political considerations are making some previously transparent
markets, speci�cally; the UK, the Euro zone and the USA – more di�cult to read in the near term,
and this can only be a positive for Australian markets, where despite our own Federal Election, we
are seen by the investment community as an extremely safe market to invest in.
What is remarkable about this investment cycle is that much of the contraction in yields occurred
when most leasing markets were still in recovery mode. Sydney and Melbourne are now �rmly in
growth mode, with Prime Grade net e�ective rents in the Sydney CBD Core precinct growing by
20 per cent in the year to June 2016, and by 8.6 per cent in the Melbourne CBD. Over the next �ve
years, we expect net e�ective rents to grow by 7.7 per cent per annum in the Sydney CBD and
5.6 per cent per annum in Melbourne. It is the growth environment of these two (2) cities that leads
us to conclude that they will remain the focus for investment capital in the near future. However,
Perth is also seeing increased capital �ows, from those buyers seeking value in a counter cyclical
environment, proving that opportunities still exist for those requiring a higher return.
We trust you �nd the Capital Markets O�ce Investment Review an insightful read.
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JOHN MARASCO
MANAGING DIRECTOR
CAPITAL MARKETS AND
INVESTMENT SERVICES
Over the past two (2) years Sydney and Melbourne have firmly cemented their positions as global cities in the context of office investment capital. Colliers International’s most recent Global Investor Outlook (2016) found that only London ranked ahead of the two major Australian cities as the preferred destination of global property capital.
Total office investment sales volumes for the Financial Year Ending (FYE) 2016 came very close to equalling volumes in FYE2015, despite a low supply environment. Sale volumes in FYE2016 were $15.91 billion versus $16.16 billion in FYE2015. Once again, sales volumes in NSW dominated the country despite being $584 million down on the previous year at $8.15 billion. States that saw an increase in sales volumes were Victoria, Western Australia and ACT.
KEY FINDINGS
MIGRATION AND EMPLOYMENT GROWTH ACCELERATING IN NSW & VIC
On purely financial metrics Sydney and Melbourne still provide a significant yield premium when benchmarked against other major cities. Sydney CBD Core precinct Prime Grade office yields currently average 5.50 per cent and Melbourne’s closely follow at 5.60 per cent. Comparative asset yields in the major US cities of New York and Los Angeles average a full 100bps lower at 4.60 per cent and in the Asian cities of Hong Kong, Singapore and Shanghai they are even tighter, at an average of 4.08 per cent.
The enduring challenge for Australian markets has been to provide these investors with globally competitive office assets of the scale, design and resilience that they are used to in major markets such as London, New York and Singapore. The next development cycle is underway in Sydney and Melbourne and will go some way to alleviating this pressure and are expected to further realign the market’s expectations of returns and set a new benchmark for cap rates.
FYE 2016 SALES VOLUME
OFFSHORE OFFICE PURCHASES
SOVEREIGN WEALTH & SUPER FUNDS
BY STATE
(DOWN $250 MILLION ON FYE2015)
HIGHEST PROPORTION IN HISTORY
UP FROM 4% IN FYE2008
BIL$ 1.92
QLD
$15.91 BIL
LIO
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BIL$ 8.15
BIL$1.88
BIL$0.68
BIL$0.55
BIL$0.35
BIL$4.30
NSWVIC
QLD
WA SA
ACT
59%
32%
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OFFICE EDITION
55 CLARENCE STREET, SYDNEY:
Currently being marketed by Colliers
International on behalf of Eureka.
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Source: Colliers International / RCA
OFFICE INVESTMENT VOLUMES BY COUNTRY OF CAPITAL
$0 $4,000$2,000 $6,000$1,000
AUSTRALIA
CHINA
USA
SINGAPORE
HONG KONG
KOREA
GERMANY
SWITZERLAND
UNDISCLOSED(OFFSHORE)
UK
MALAYSIA$5,000$3,000 $7,000
O�shore buyers dominated transaction activity in
FYE2016, buying just under $9.4 billion of o�ce
assets across the country. Included in this is the
$2.45 billion sale of the Investa Portfolio to China
Investment Corporation (CIC) – making up over a
quarter of the o�shore sales volume. Even excluding
this sale – the biggest in Australian history – sales
to o�shore buyers were 81 per cent higher than the
next buying group – local institutions.
YEAR IN REVIEW
There were a number of reasons for this in�ux
of capital from foreign buyers. Chief amongst
these is the ongoing search for yield. Global
bonds yields remain stubbornly low and a
number of geopolitical threats have been, or are
occurring around the world, including the Brexit
vote and the US presidential elections, both of
which have the potential to impact con�dence in
the two strongest o�ce markets in the world.
Interestingly, investment volumes of Australian
investors on Australian property changed
very little from levels seen in 2008. The
major change seen from capital sources is
by Asian investors, and in particular Chinese
investors. This is partly due to loosening
capital restrictions in those countries and huge
reserves held by Sovereign Wealth Funds in
those countries that need to be invested in 'safe
haven' markets.
OFFICE INVESTMENT SALES BY PURCHASER TYPE
FYE 2008
FYE 2012
FYE 2010
FYE 2014
FYE 2009
FYE 2013
FYE 2011
FYE 2015
FYE 2016
MIL
LIO
NS
$AU
D
Source: Colliers International / RCA
Source: Colliers International / RCA
MILLIONS $AUD
$18,000
$12,000
$4,000
$16,000
$10,000
$2,000
$14,000
$6,000
$8,000
$0
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Corporate
Developer
Government
Local Institution
Private
Syndicate
Undisclosed
O�shore
■
FYE2016 FYE2008
OFFICE INVESTMENT SALES BY STATE
FYE 2008
FYE 2012
FYE 2010
FYE 2014
FYE 2009
FYE 2013
FYE 2011
FYE 2015
FYE 2016
MIL
LIO
NS
$AU
D
$18,000
$12,000
$4,000
$16,000
$10,000
$2,000
$14,000
$6,000
$8,000
$0
■
NSW
VIC
QLD
ACT
WA
SA
■
■
■
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18 SMITH STREET, PARRAMATTA:
Currently being marketed by Colliers
International on behalf of Altis
Property Group
333 KENT STREET, SYDNEY: Currently
being marketed by Colliers International
on behalf of a private client
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28 FRESHWATER PLACE, MELBOURNE: Currently
being marketed by Colliers International on behalf
of Frasers Property Australia and The GPT Group
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OFFICE EDITION
The impact of Super and Sovereign Wealth Funds on our office investment markets can’t be underestimated. In FYE2008, only four per cent of institutional investment was sourced from these sectors. By FYE2016, this proportion had risen to 32 per cent.
The rate of compression in Prime Grade yields across the various CBD markets differs significantly between the major eastern seaboard markets and all others. Not surprisingly, Sydney and Melbourne have seen sharp decreases, particularly late into 2015 as deal activity produced a flood of yield compression evidence.
FYE 2008
FYE 2016
TRANSACTION VOLUMES BY TYPE OF INSTITUTION
25%INVESTMENT MANAGER
54%UNLISTED FUND
4%SUPER FUND
35%UNLISTED FUND
7%SUPER FUND
19%INVESTMENTMANAGER
22%REIT
7%REIT
25%SOVEREIGNWEALTH FUND
AUSTRALIAN CBD PRIME GRADE YIELDS
Source: Colliers International / RCA
Source: Colliers International
SYDNEY (CORE) MELBOURNE BRISBANE PERTH ADELAIDE CANBERRA
9.0 %
8.5 %
8.0 %
7.5 %
7.0 %
6.5 %
6.0 %
5.5 %
5.0 %
JUN
-06
DEC
-06
JUN
-07
DEC
-07
JUN
-08
DEC
-08
JUN
-09
DEC
-09
JUN
-10
DEC
-10
JUN
-11
DEC
-11
JUN
-12
DEC
-12
JUN
-13
DEC
-13
JUN
-14
DEC
-14
JUN
-15
DEC
-15
JUN
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Barangaroo International Towers, and yields achieved on these sales reflect the lower end of our average yield range for Premium Grade transactions (a 37.5 per cent share in ITS1 Barangaroo sold to the Qatari Investment Authority (QIA) on a cap rate of 5.75 per cent in mid 2015, with a further 25 per cent share selling to the Hong Kong Monetary Authority (HKMA) in late 2015 on a cap rate of 5.25 per cent).
AMP Capital’s Quay Quarter Sydney development is located in arguably the most prestigious location in all of Sydney, taking up close to two full city blocks bordered by Bridge, Alfred, Loftus and Phillip Streets. Quay Quarter Sydney will be the only full precinct development in the CBD core, and will be a 24/7 lifestyle destination, comprising not just office but boutique retail, low-rise apartment living and cafes, restaurants and bars. 3XN Architects from Copenhagen won the design competition for the new Quay Quarter Tower, which will comprise of almost 90,000m2 of next generation office accommodation that will provide innovative workspaces and ‘elastic’ space options for added tenant flexibility. The site is perfectly connected via all modes of transport including ferry, train, bus and car and will also enjoy convenient access to the new $2.2 billion Sydney Light Rail infrastructure project. The building’s design and features will ensure it becomes a globally recognised asset, comparable with the likes of the World Trade Center in Manhattan and The Shard in London.
Brookfield’s Wynyard Place will also change the shape of the major transit precinct around Wynyard Station, and will also be integrated with the $2.2 billion Sydney light rail project which is due for completion around the same time. The major tower as part of the development will be a 59,000m2, 29 level office tower at 10 Carrington Street.
NEXT GENERATION ASSETS TO REALIGN CAP RATE EXPECTATIONS
Over the past two (2) years Sydney and Melbourne have firmly cemented their positions as global cities in the context of office investment capital. Colliers International’s most recent Global Investor Outlook (2016) found that only London ranked ahead of the two major Australian cities as the preferred destination of global property capital. Of course this survey was completed prior to the UK’s surprising referendum result to exit the EU, and so it could be argued that Sydney and Melbourne are now viewed as the highest ranked cities. The challenge, however, for Australian markets has always been to provide these investors with globally competitive office assets of the scale, design and resilience that they are used to in major markets such as London, New York and Singapore. The next development cycle is underway in Sydney and Melbourne and will go some way to alleviating this pressure, and is expected to further realign the market’s expectations of returns and set a new benchmark for cap rates.
Much has been made of the withdrawal pipeline impacting the Sydney CBD and changing the skyline in turn. Colliers International are forecasting almost 400,000m2 of office space will be withdrawn from the market over the next four years to make way for new office developments, residential conversions or the Sydney Metro project. What makes this cycle so opportunistic for developers is the diminishing total NLA of the CBD market is coming at the same time as employment growth is expected to be strong, with almost 26,000 1 new white collar workers to move into the CBD – this equates to demand of approximately 385,000m2.
These strong demand conditions, as well as increased investment in CBD infrastructure by both the local and state governments, has opened up opportunities for some of Australia’s premier developers to build the next generation of office assets in the Sydney CBD. Already underway is
TRANSACTION TRENDS
1 Deloitte Access Economics, Employment Data Forecasts, Q1 2016
Colliers International are forecasting almost 400,000m2 of office space will be withdrawn from the Sydney CBD market over the next four years to make way for new office developments, residential conversions or the Sydney Metro project.
NET SUPPLY VERSUS FORECAST TAKE UP - SYDNEY CBD
Source: Colliers International. Deloittes Access Economics Net Supply (m2) Forecast Take Up (m2)
250,000
200,000
150,000
100,000
50,000
0
-50,0002016 2017 2018 2019
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QUAY QUARTER SYDNEY
MIRVAC 35 PITT STREET
151 CLARENCE STREET 60 MARTIN PLACE
WYNYARD PLACE
LENDLEASE CIRCULAR QUAY
BARANGAROO INTERNATIONAL TOWERS
CIRCULAR QUAY
GROSVENOR
STREET
WYNYARD
MARTIN PLACE
WYNYARD
CIRCULAR QUAY
ST JAMES
MUSEUM
TOWN HALL
QUEEN VICTORIA
BUILDING
TOWN HALL
GE
OR
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SYDNEY'S NEXT
DEVELOPMENT CYCLE
YO
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T
MARKET ST
TRAIN STATION
LIGHT RAIL STATION
DEVELOPMENTS
PARK STT
BATHURST ST
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LIVERPOOL STOXFO
WILLIAM ST
CO
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KING ST
HUNTER ST
BLIG
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AG
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BE
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S
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T
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T
T
% %
%
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(YEAR END 2019)
LO
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ON
NEW
YO
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PA
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FORECAST
OFFICE FUNDAMENTALS OUTPERFORMING
ON A GLOBAL BASIS
CBD
VACANCY RATE
17.9 8.2
7.5
4.3
On purely �nancial metrics, Sydney and Melbourne still
provide a signi�cant yield premium when benchmarked
against other major cities. Sydney CBD Core precinct Prime
Grade o�ce yields currently average 5.50 per cent and
Melbourne’s closely follow at 5.60 per cent. Comparative
asset yields in the major US cities of New York and Los
Angeles average a full 100bps lower at 4.60 per cent and in
the Asian cities of Hong Kong, Singapore and Shanghai they
are even tighter, at an average of 4.08 per cent. The yield
spread to 10 year bond rates is also seen as more attractive
than some other markets. However, these yield premiums
are getting smaller, and coupled with our incentive regime
that confounds some global investors, the upscaling of asset
quality is imperative if Australia is to continue to attract global
capital and keep yields compressing to levels near 5 per cent.
Over the immediate forecast period, o�ce market
fundamentals in Sydney and Melbourne compare very well
to our global city comparisons. Hong Kong is always a tight
market, re�ected in its perennially low cap rate. On a vacancy
and forecast outlook however, Sydney and Melbourne
compare very favourably to major global cities, and these
improving tenant market fundamentals are expected to also
drive cap rate compression over the next three (3) years.
A new development cycle in Melbourne is also underway,
incorporating both Docklands and CBD grid sites, after
years of Dockland’s developments dominating new supply.
Lendlease continues to revitalise Docklands with the
development of Melbourne Quarter. Already a new 25,000m2
2 Deloitte, The purpose of place Reconsidered,
Building the Country #5, 2015
tower is underway that has been pre-committed by Lendlease
and ARUP. Lendlease has scope for a further two o�ce
towers at the site and will also be developing an apartment
precinct with a 2,000m
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‘skypark’ to form the centrepiece.
Cbus Property’s unique mixed-use development at 447
Collins Street will set a new benchmark for o�ce quality
in the Melbourne CBD. Coupled with the prime location in
what is now the centre of Collins Street, 447 Collins Street
will include a highly activated 2,000m
OFFICE EDITION
2 public realm o�ering
diversity of spaces. The public realm can be accessed directly
from Collins Street plus there is opportunity to integrate
part of Market Street adjoining the site providing a further
1,500m2 of public park. The o�ce development itself will be
a 50,000m2 Premium Grade o�ering (increasing Melbourne’s
Premium Grade space by 6.5 per cent) with 1,800m2 to
2,300m2 �oorplates providing diversity of workplace. It will
also be Melbourne’s �rst WELL rated building and include
extensive state of the art lifestyle facilities.
As well as new developments, existing buildings in the
Melbourne CBD are being refurbished and will also add to
the supply of next generation assets. To maintain its market
position as Melbourne’s landmark o�ce tower, Rialto is
undergoing a $200 million aesthetic and services upgrade.
Upon completion, guests will be welcomed by a high end
retail o�ering and a brand new ground �oor foyer enclosed
in a curtain wall of full height glass. Tenants will bene�t from
new destination lift controls, cutting edge end of trip facilities
and behind the scenes new chillers, boilers and air handling
units to ensure optimum comfort. On �oor, the entry lobbies,
bathrooms, ceilings and light �ttings are being upgraded in
keeping with Rialto’s Premium nature.
All of these developments in Sydney and Melbourne will
cement these cities’ reputations as globally competitive, for
both tenants and capital, and meet not only the current, but
the future needs of tenants that many existing prime grade
buildings will need signi�cant capital expenditure to achieve.
The importance of 'place’ of the CBDs of our major global
gateway cities is only going to be enhanced as Australia
moves from the industrial era, into a more service producing
economy. Global accounting and consultancy �rm Deloitte
recently noted the importance of place in their fascinating
Building the Lucky Country series: “The purpose of place
in a knowledge economy is to facilitate the productive
interaction of knowledge workers. Even in a world of instant
global connectivity, this typically involves them working in
close proximity.” 2 What this means is that technology, rather
than replacing the need for human interaction, merely is one
method of facilitating interaction between workers. The need
to provide appropriate and resilient workspaces that allow
workers to �ourish and work pro-actively in the knowledge
economy, will be critical to the success of our CBDs. These
are the future buildings that are anticipated to set cap rate
benchmarks over the next �ve to ten years.
Forecast CBD Vacancy Rate
(end 2019)
Prime Grade Face Rent Growth (annual average to
year end 2019)
SYDNEY*
MELBOURNE*
LONDON
PARIS
NEW YORK
LOS ANGELES
HONG KONG
SINGAPORE
SHANGHAI
6.30 % 5.60 % 5.50 %
7.70 % 6.30 % 4.40 %
2.90 % 7.50 % 4.70 %
4.30 % 4.00 % 2.00 %
9.90 % 8.20 % 3.20 % (Manhattan)
17.50 % 17.90 % 3.00 %
2.60 % 3.50% 4.00 %
7.10 % 16.10 % 4.50 %
4.00 % 6.70 % 4.80 %
PRIME CBD OFFICE CAP RATES AND GOVERNMENT BONDS BY SELECTED CITIES
NET OVERSEAS MIGRATION, NSW & VIC
Source: Colliers International, ABS 3101
RISKS TO CONSIDER IN THE CURRENT CYCLE
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
CAP RATE (June 2016) 10 YR GOVERNMENT BOND (Per Annum)
NSW VIC
The risk outlook for Australia’s o�ce markets has changed
considerably during this cycle compared to previous cycles,
as foreign capital re-weights the risk outlook to global
considerations, rather than local �scal or monetary policy
changes or local debt markets. The major global risks are
really the rise of bond markets or other alternative asset
classes. Capital Economics forecasts 10 year US Treasury
Bonds to rise from their current (at time of writing) 1.81 per
cent to 3.00 per cent by the end of 2017, while Japanese
Bonds will likely still be in negative territory, and German
Bonds rise only moderately, by about 58 basis points to the
end of 2017. However, the recent Brexit vote in the UK is
presenting some interesting scenarios. It is our opinion that it
will probably lead to further downward pressure on an already
very low global bond yields in the short to medium term,
increasing the relative attraction of 5 per cent to 6 per cent
yields on Core Australian (Sydney and Melbourne) property
over the 2016 to 2017 outlook period.
CA
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AT
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NM
EN
T B
ON
D (
%)
PE
OP
LE
These �gures are exceptionally important in determining
the long term demand is potential for commercial property
markets across the country. This provides further evidence
that demand in consolidating in our two global cities – Sydney
and Melbourne. We are already seeing the impacts of this, with
net e�ective rents in the Sydney CBD Core precinct growing
by 20 per cent in the year to June 2016, and by 8.6 per cent
in the Melbourne CBD. Over the next �ve years we expect net
e�ective rents to grow by 7.7 per cent per annum in the Sydney
CBD and 5.6 per cent per annum in the Melbourne CBD.
ME
LB
OU
RN
E
SY
DN
EY
SH
AN
GH
AI
LOS
AN
GE
LES
SIN
GA
PO
RE
NEW
YO
RK
(MA
NH
AT
TA
N)
LON
DO
N
PAR
IS
HO
NG
KO
NG
% %
%
% % 7.0 %
6.0 %
5.0 %
4.0 %
3.0 %
2.0 %
1.0 %
0.0 %
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
SY
DN
EY
SH
AN
GH
AI
HO
NG
KO
NG
ME
LB
OU
RN
E
Source: Colliers International. Trading Economics
Source: Colliers International, PCA OMR Jan 2016
* Note that Current CBD Vacancy Rates for Australian markets are rates as at Jan 2016.
3.5 6.3
16.1
6.7 5.6
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The latest ABS Australian Demographics Statistics
release has con�rmed what demand indicators
in those property markets would indicate – that
migration in�ows continue to increase. 68,368
o�shore migrants moved to NSW in 2016, and
60,532 to Victoria, a small increase for both states
on the previous year. These two states are bucking
the trends seen in the other states, where o�shore
migration �ows are decreasing. 13
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Current CBD Vacancy Rate (Total Market)
FYE2016 FYE2017
YIELDS 7.3% 7.3%VACANCY 14.1% 15.7%RENTAL GROWTH 0.0% -0.5%EMPLOYMENT 0.9% 0.7%SUPPLY 54,684 9,846
FYE2016 FYE2017
YIELDS 6.9% 6.9%VACANCY 19.2% 21.9%RENTAL GROWTH -20.0% 0.0%EMPLOYMENT -1.9% -0.9%SUPPLY 142,545 2,100
PERTH
ADELAIDE
OFFICE FORECAST INDICATORS
WESTERN AUSTRALIA
NORTHERNTERRITORY
SOUTHAUSTRALIA
NOTE YIELDS – Prime Grade EMPLOYMENT – y-o-y White Collar
Employment Growth
Source: Colliers International, PCA OMR Jan 2016, Deloittes Access Economics * FYE2016 vacancy rates are PCA OMR Jan 2016 vacancy rates
RENTS – y-o-y Prime Grade Net Effective Rental GrowthSUPPLY – New (m2), 12 months to20
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FYE2016 FYE2017
YIELDS 7.0% 7.0%VACANCY 12.5% 10%RENTAL GROWTH 2.0% 3%EMPLOYMENT -2.1% 0.4%SUPPLY 6,252 0
CANBERRA
QUEENSLAND
NEW SOUTH WALES
NORTHERNTERRITORY
SOUTHAUSTRALIA
VICTORIA
FYE2016 FYE2017
YIELDS 5.5% 5.2%VACANCY 6.3% 4.9%RENTAL GROWTH 20.3% 12.1%EMPLOYMENT 4.9% 1.5%SUPPLY 294,432 171,701
SYDNEY
FYE2016 FYE2017
YIELDS 6.3% 6.2%VACANCY 14.9% 16.4%RENTAL GROWTH -7.7% 8.9%EMPLOYMENT 0.9% 1.0%SUPPLY 121,394 82,153
BRISBANE
FYE2016 FYE2017
YIELDS 5.6% 5.3%VACANCY 7.7% 7.1%RENTAL GROWTH 8.6% 10.8%EMPLOYMENT 1.7% 1.7%SUPPLY 100,069 52,000
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SYDNEY CBD
FYE2016 has seen a continuation of strong capital �ows in the
Sydney O�ce market, rea�rming its position as Australia’s core
investment destination of choice. Transaction volumes tracked
down slightly in FYE2016, recording $8.15 billion, compared
to $8.736 billion in FYE2015 (for transactions greater than
$20 million). While capital markets continue to display
unprecedented appetite for Sydney o�ce assets, Sydney’s
strong leasing market and truly global status are giving its assets
a feeling of irreplaceability.
Large-scale transactions in the Sydney market in 2016 began
with CIC’s purchase of the $2.45 billion Investa Portfolio,
marking a much anticipated shift in yields for core assets. Of the
$2.45 billion in assets, $1.8 billion were in the Sydney market,
including �agship assets such as 126 Phillip Street, 400 George
Street and 225 George Street. The transaction represented
the largest o�ering of prime Sydney stock for some time and
con�rmed yields for prime assets sat in the low 5 per cent
range.
The demand for high quality investment product and particularly
product underpinned by long-term leases, was highlighted by
two (2) of the larger transactions of 2016. Mirvac’s successful
bid for the Australian Technology Park in Redfern in November
2015 saw the AMP Wholesale O�ce Fund (AWOF) and
Sunsuper, partner with Mirvac in the 93,000m² development.
Mirvac’s scheme was supported by a 15 year lease to CBA,
MAJOR TRANSACTION OVERVIEW
creating an annuity-style product with an end value in excess
of $1 billion.
In a similar fashion, Lendlease’s sell-down of 25 per cent of their
holding in Tower (ITS1) at Barangaroo to HKMA in December
2015 was another demonstration of investors’ appetite for quality
stock. The transaction was structured around a di�erential cap
rate, with HKMA investing on a cap rate of c5.25 per cent across
the occupied space, with a softer cap rate applied to the vacant
space. At the time of the transaction, ITS1 was 48 per cent let
to tenants PWC, Marsh, HSBC & Servcorp, leaving in excess of
50,000m2 of vacancy.
The latter half of FYE2016 saw the close of (2) of the major
on market campaigns for 2016, with 420 George Street and
1 Shelley Street changing hands. Fortius’ 75 per cent stake in
420 George Street was purchased by the Investa Commercial
Property Fund (ICPF) on a yield of c 5.25 per cent. The 25 per
cent balance has since sold. Brook�eld’s sell-down of a range of
assets across Australia culminated in their 1 Shelley Street asset
being sold to a partnership between Charter Hall and Morgan
Stanley Real Estate Investing for $525 million in May 2016.
In another signi�cant year for the Sydney o�ce market, 2015/16
showed a continuation of strong investor appetite for high-quality
product. With sentiment growing in the market that the low cost
of capital environment will become a long term theme, 2017 is
set to see Sydney retain its core investment status.
19 HARRIS STREET, PYRMONT:
Sold by Colliers International to UBS
Grocon on behalf of LaSalle Investment
Management for $91,919,000
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OFFICE EDITION
17
MELBOURNE CBD
A �ood of on-market activity followed the announcement of
China Investment Corporation as the successful bidders for what
became the biggest sale globally when it purchased the Investa
Property Trust (IPT) portfolio of 9 properties for $2.45 billion.
A 50 per cent interest of 120 Collins Street, the only Melbourne
asset apart of the portfolio, sold for a reported $401 million.
222 Exhibition Street and 460 Lonsdale Street were both hotly
contested marketing campaigns by Colliers International, both
representing sub 6 per cent market yields and selling for 10 per
cent plus premiums above their most recent book valuations.
The �agship o�ering in the Melbourne CBD during FYE2016
was Brook�eld Property Partners' sell down of a
50 per cent interest in Southern Cross Towers (also transacted
by Colliers International), located at 121 Exhibition Street and 111
Bourke Street. In what was the largest transaction to occur in
Melbourne, Blackstone paid $675 million, representing an initial
yield of 4.96 per cent. This transaction represented the strongest
pricing metrics ever to be seen in Melbourne and consequently
re-rated the market.
Following on from last �nancial year, FYE2016 saw o�shore
investors continue to be very active on the buy-side in
Melbourne as 11 buildings were acquired by a combination
of developers, retail funds, pension funds and wholesale
funds. The dominant origin of o�shore capital emanated
from the USA (54 per cent) consisting of Blackstone’s
50 per cent interest in Southern Cross Towers, Pembroke’s
acquisition of 161 Collins Street and LaSalle Investment
Management purchasing 222 Exhibition Street on behalf of
a US pension fund.
Core investors from Asia were prevalent in FYE2016 with
4 transactions totalling $622 million. These sales included
the purchases of 120 Collins Street (CIC; 50 per cent for
$401 million) and 383 La Trobe Street (Sterling Global;
$70.7 million).
75 DORCAS STREET,
SOUTH MELBOURNE:
Sold by Colliers International
on behalf of SachsenFonds to
Growthpoint for $166,000,000
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Currently being marketed by Colliers
International on behalf of the
Lendlease-managed APPF Commercial
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OFFICE EDITION
O�shore institutions have been most active divesting 19 o�ce
investments in FYE2016, representing 45 per cent of total
volume. Domestically, prominent groups to divest o�ce assets
included Investa Property Group, AMP Capital and REST.
The second half of FYE2016 has seen subdued activity in the
Melbourne CBD with only 2 transactions above 50 million +
occurring through the sales of 1 Collins Street and 120 Spencer
Street. Activity in the second half has largely been driven in the
City Fringe and Metro markets with the on-market campaigns
of Mirvac’s Como Centre in South Yarra, 75 Dorcas Street,
South Melbourne through SachsenFonds and Frasers Property
Group’s divestment of two metro assets located in Richmond
and Springvale.
BRISBANE
Brisbane has continued the momentum generated in the
second half of 2015, garnering signi�cant interest from both
domestic and o�shore capital. The substantial yield arbitrage
between Brisbane and the Australian gateway cities of Sydney
and Melbourne remains a key driver of o�shore enquiry
in Brisbane, exempli�ed through investments in 2016 by
Singapore based AEP Investment Management and LaSalle
Investment Management, purchasing 41 George Street (CBD)
and 28 Macgregor Street (Metro) respectively. Both deals were
brokered by Colliers International and underpinned with leases
to the Queensland State Government (5.35 year WALE) and the
Commonwealth Government (5 year WALE) respectively.
The sales further highlight Brisbane as an attractive destination,
with quality CBD and Metropolitan o�ce investments with long
WALEs and strong tenant covenants in high demand, given their
ability to ride out the challenging leasing market. O�shore groups
are becoming increasingly prevalent in the market and domestic
funds are beginning to lower their investment return hurdles in
order to compete. Adding to this has been the 'lower for longer'
theme globally, with reserve banks across the world lowering
cash rates to record levels resulting in low cost of debt and low
or negative risk-free rates (bond yields).
Keeping with this theme, ISPT Super Property’s Green Square
Brisbane, South Tower, (505 St Pauls Terrace, Fortitude Valley)
is likely to re-rate the metropolitan market. Underpinned by
an 11 year WALE (as at 22 August 2016) to local government
(Brisbane City Council) this ‘annuity-style’ o�ce investment will
be hotly contested by both o�shore and domestic groups. The
international expression of interest campaign is being conducted
exclusively by Colliers International. There is a scarcity of quality
o�ce product within the Brisbane market creating competitive
tension from both o�shore and domestic funds.
CANBERRA
Throughout the second half of FYE2016, the Canberra o�ce
market has seen a continuation of the very high investment
activity. After a record surge of activity in the last quarter
of 2015, peaking with the sale of Louisa Lawson for
$224.5 million, demand has increased substantially over the
past 12 months. Foreign investors and major REITs continue
to be attracted to the high level of cash �ow security o�ered
by Canberra’s prime assets that have long term government
leases. There has also been a rise in demand for secondary
assets that have less secure cash �ow and expiry pro�les.
GREEN SQUARE, SOUTH TOWER, 505 ST PAULS TERRACE,
FORTITUDE VALLEY, QLD: Currently being marketed by
Colliers International on behalf of ISPT
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Total sales values 2016 YTD have increased 31 per cent on
the same period in 2015. The largest transaction recorded
in 2016 has been the sale of Aviation House for $68.1 million
in the Woden Town Centre. The building was sold to an
interstate private investor and was keenly sought after due to
the staggered expiry pro�le of government tenants.
AREIT investors have traditionally dominated the buyer pro�le
in the ACT, however there has been a noticeable shift toward
new entrants that include international institutions, syndicated
investors and small to medium privates. In FYE2016 we
have witnessed new entrants into the market, all chasing a
variety of assets types. Other buyers such as Centuria and
Growthpoint have expanded their Canberra portfolios over the
12 months.
Local private investors have taken the opportunity to
purchase secondary assets that have scope for value uplift
through re-positioning. The Molonglo Group has plans to
upgrade 33 Allara Street and the Morris Property Group will
add a residential apartment tower to their purchase of 20
Allara Street. The Zapari Group plan to convert Eclipse House
into a boutique city hotel which shows the trend continuing
into FYE2017.
The occupier market is improving, and we are expecting A
Grade vacancy to contract signi�cantly. This has helped to ease
investor concerns about cash �ow risk in the medium to long
term. A more positive general outlook has been adopted for
tenant retention, falling incentives and a strengthening landlord
bargaining position. The outlook is not consistent across all
locations and asset types however, and in particular, C and D
grade assets will have consistently high vacancy rates.
ADELAIDE
The Adelaide o�ce market has seen volumes fall over the
FYE2016 to $354 million, compared to record sales the
previous year of $525 million. Sales volumes, however, are
still above the post GFC average of $278 million.
Institutional investors have remained active, accounting for
over 60 per cent of the sales in FYE2016. They have been a
consistently active purchaser type since FYE2011, with
private investors accounting for the remainder of the sales.
The interesting trend however has been the move from
domestic to o�shore capital. The purchase of Rundle Place and
80 Grenfell Street by Blackstone (USA) and 100 Waymouth
Street, purchased by a Singaporean investor are the two most
signi�cant sales in the period. O�shore investors have been
active in the east coast o�ce market for some time, but have
now seen that there is good value in the Adelaide o�ce market.
Yields have not tightened as rapidly in the Adelaide market and
there is still a signi�cant spread between the Adelaide o�ce
market and most other east coast o�ce markets.
Yields in the o�ce market have started to tighten with the
evidence of 100 Waymouth Street, 30 Flinders Street and 80
Grenfell Street seeing yields below 7 per cent. The overall
market trend has seen yields for both Premium and A Grade
tighten by between 50-60 basis points over the last 12
months. Prime yields, which includes Premium and A Grade
currently range from 6.0 per cent to 8.0 per cent. This is a
large range, but is re�ective of the weakness in the leasing
market. Prime quality assets with long WALEs are seeing
stronger demand which is resulting in much tighter yields.
Buildings with any vacancy or short WALEs are much harder
to sell due to the higher risks around the leasing market.
108 NORTH TERRACE, ADELAIDE: Currently being marketed by Colliers International on behalf of DEXUS Property Group
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OFFICE EDITION
28 O'CONNELL STREET, SYDNEY: Currently
being marketed by Colliers International on
behalf of CHUBB Insurance
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as institutional and foreign capital chase investments that
provide reliable rental returns and comparatively attractive
yields in comparison to other locations and asset classes.
As a result of this robust interest, capital values have
been, and are likely to remain, supported for quality assets.
For secondary assets, or those with signi�cant vacancy,
capital value deterioration may result. This is due to
a reduced risk appetite and tighter funding conditions
as �nancial institutions seek to reduce exposure to
potential non-performing or bad debts on their loan books.
However, since the start of the downturn in FYE2014,
distress assets sales have been limited.
The lower Australian dollar in combination with
comparatively high yields and lower foreign funding
costs has made Australian and Perth commercial assets
signi�cantly more attractive to foreign investors. As such,
expected yields for Perth CBD assets with good lease
pro�les are likely to remain relatively tight throughout
FYE2017, despite economic and market vacancy concerns.
Colliers International has also noted both domestic and
international investors, fully aware of the current lull in the
Perth market, are increasingly interested in Perth assets as
a counter-cyclical strategy. Although above average vacancy
and contracting rental income are still apparent, the longer
term prospects of Perth remain attractive for these investors.
PERTH
Perth’s CBD o�ce market continues to exhibit a high level
of vacancy as a result of low net tenant demand.
Vacancy increased from 19.2 per cent in January 2016 to
22.5 per cent in July 2016.
Assets worth $681.2 million changed hands in the Perth
CBD and CBD fringe locations during FYE2016. The
largest of these were;
• A 50 per cent interest in Exchange Tower acquired by
Primewest for approximately $110 million.
• The Forrest Centre at 219-221 St Georges Terrace
purchased by a foreign investor from the Insurance
Commission of WA (ICWA) for $193.6 million.
• 81 St Georges Terrace, which had recently been fully
leased to the WA State Government on a ten year lease,
also purchased by a foreign investor for $81.3 million.
• 190 St Georges Terrace, which had a WALE of circa
3.5 years, acquired by Credit Suisse REIM for $63.9 million
which equated to a market yield of approximately
7.7 per cent.
Notwithstanding the di�cult leasing market, assets with
relatively strong lease pro�les, and/or redevelopment
prospects, continue to be in demand, and when available,
attract strong interest from both domestic and foreign
investors. This has led to continued market yield compression
LOUISA LAWSON, 25 COWLISHAW STREET, GREENWAY
ACT: Sold by Colliers International on behalf of Amalgamated
Property Group to FG Asset Management for $224,500,000
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OFFICE EDITION
OFF-MARKET TRANSACTION OF PRIME SYDNEY ASSET
77 King Street, Sydney is an A Grade office asset in a high profile location on the intersection of King & George Streets. The 18 level office stratum was transacted off-market between the owner Keppel REIT and Invesco.
The transaction marked an example of the market’s appetite for A Grade office product in prime Sydney locations. 77 King Street’s position on the corner of King & George Street is set to benefit from significant infrastructure investment in the coming years, with Sydney’s Light Rail and Metroline stations in close proximity. This infrastructure spend, in conjunction with Sydney’s strong leasing market, was enough for Invesco to make a compelling bid in the one of the largest off-market Sydney office transactions in the second half of FYE2016.
NEW SOUTH WALES
77 KING STREET, SYDNEY
Vendor Keppel REIT
Purchaser Invesco
Sale price $160.0 million
Passing initial yield 5.75%
NLA 13,625 m2
Site area N/A (Stratum)
Net passing income $9,505,303
WALE 3.66 Years (By income)
CASE STUDIESColliers International's Capital Markets transacted 77 King Street, Sydney in January 2016
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LANDMARK EAST END MELBOURNE OFFICE TOWERS
Southern Cross Towers features two ‘A Grade’ landmark office towers providing a total NLA of 126,056m². Southern Cross East at 121 Exhibition Street comprises a 37 level tower of 77,378m² with centre typical floor plates of approximately 1,770m² to 2,200m². Southern Cross West at 111 Bourke Street comprises a 20 level tower of 44,431m² with typical side core plates ranging from approximately 2,200m² to 2,850m². The development includes ground level retail accommodation and basement car parking for 950 vehicles. Major tenants include the Victorian Government and Australian Postal Corporation.
The sale of Southern Cross Towers represented the largest office transaction in the Melbourne CBD, eclipsing the sale of ‘CBW’, a 100 per cent interest which sold for $608.1 million.
VICTORIA
SOUTHERN CROSS TOWERS: 121 EXHIBITION STREET & 111 BOURKE STREET, MELBOURNE
Vendor Brookfield Property Partners
Purchaser Blackstone
Sale price $675 million (50%)
Passing initial yield 4.97%
Site area 9,573m²
Net passing income $67,192,341 (fully leased)
WALE 5.20 years
Colliers International's Capital Markets transacted Southern Cross Towers, Melbourne in December 2015
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179 Elizabeth Street, Sydney, is an A Grade o�ce asset
completed in 1992, located within the Mid-Town precinct
of Sydney, with dual street frontages to Castlereagh and
Elizabeth Streets.
The asset comprised of a Stratum interest in the building,
inclusive of 107 car spaces, and 15,030m² of retail and
o�ce NLA. The targeted sales campaign focussed around
speci�c buyers with an appetite for stratum title assets.
The buyer, Markham Corporation, acquired the asset
shortly after divesting their share of the IMAX Theatre site
in Darling Harbour to Grocon.
NEW SOUTH WALES
179 ELIZABETH STREET, SYDNEY
Vendor LaSalle Investment Management
Purchaser Markham Corporation
Sale Price $148.8 million
Passing initial yield 6.63%
NLA 15,030m²
Site area 1,814m²
Net passing income $10,802,523
WALE 4.21 Years (By income)
PRIME OFFICE STRATUM
OVERLOOKING HYDE PARK
Colliers International's Capital Markets
transacted 179 Elizabeth Street, Sydney in
January 2016
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GOVERNMENT LEASED ASSET TRANSACTS
IN BRISBANE CBD’S GROWTH PRECINCT
Set on a 2,811m² elevated corner site, 41 George Street is
predominately leased to the Queensland Government (99.71
per cent of NLA) with a 5.35 year WALE. The property is
situated within a highly strategic, growth corridor of the
Brisbane CBD as it is positioned at the gateway to the
proposed $3 billion “Queens Wharf” integrated casino,
entertainment, hotel and residential precinct which is
scheduled to open in 2022.
The highly competitive marketing campaign resulted in
multiple bids from both domestic and o�shore institutional
capital. In addition to cash �ow security, the building also
lends itself to a range of redevelopment and value-add
options. These include o�ce refurbishment and adaptive
re-use to hotel, student accommodation or residential
apartments. The acquisition of 41 George Street was AEP
Investment Management’s �rst acquisition for the Basil
Property Trust in Australia.
QUEENSLAND
41 GEORGE STREET, BRISBANE
Vendor QIC
Purchaser AEP Investment Management
Pty Ltd
Sale price $159.8 million
Passing initial yield 8.72%
NLA 29,960m²
Site area 2,811m²
Capital Value $5,334 per m²
WALE 5.35 years
Colliers International's Capital
Markets transacted 41 George Street,
Brisbane in January 2016
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ICONIC MIXED-USE ASSET
The Como Centre is a mixed-use complex located on the
prestigious corner of Chapel Street and Toorak Road, South
Yarra. The Centre comprises 4 o�ce components - two levels
of retail accommodation, a luxurious 107 room 5 star hotel
and a 629 bay commercial carpark. The o�ce component
spread across four towers (644 Chapel Street, 650 Chapel
Street, 620 Chapel Street and 299 Toorak Road), collectively
represents over 60 per cent of the asset’s net income.
VICTORIA
COMO CENTRE, SOUTH YARRA
Vendor Mirvac
Purchaser Newmark Capital
Sale price $236.5 million
Net passing income $14,134,715
Colliers International's Capital
Markets transacted Como Centre,
South Yarra in June 2016
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GOVERNMENT LEASED ASSET IN
GEOGRAPHIC CENTRE OF CANBERRA
Aviation House is a striking A Grade building in the heart of
Canberra’s Woden Town Centre. Set over 9 levels the building
provides 14,812m² of high quality o�ce accommodation
occupied by 3 Government tenants plus a ground �oor café.
Rare in Canberra, Aviation House is leased by three
Government tenants with staggered expiry which minimises
the binary expiry risk surrounding many similar assets in
Canberra. The transaction highlighted Canberra’s emergence
as a proxy for investment in Metropolitan Sydney and
Melbourne as it drew a large number of parties to the
campaign due to the relatively high yield and AAA-rated
Australian Government tenants with staggered expiry.
The Woden Town Centre is the approximate geographic centre
of Canberra, some 6 kilometres south of Parliament House and
is undergoing signi�cant revitalisation with the ACT Government
moving a 1,000 sta� to the precinct at the same time investing
in improving civic infrastructure. Coupled with the variation to
the Department of Finance’s Property Procurement Framework
AUSTRALIAN CAPITAL TERRITORY
AVIATION HOUSE, CANBERRA
in 2015 to encourage Government agencies to consider local
impacts prior to vacating locations, the Patella Group had
con�dence to make a strong bid and secure the most expensive
building to transact in Canberra in calendar year 2016 so far.
Vendor Mirvac
Purchaser Patella Holdings
Sale price $68.1 million
Passing initial yield 8.99%
NLA 14,812m²
Site area 4,464m²
Net passing income $6,118,213
WALE 4.57 years
Colliers International's Capital
Markets transacted Aviation House,
Canberra in May 2016
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OFFICE EDITION
AUCKLAND A HOTSPOT
Auckland captured the majority of the major o�ce property
transaction value in FYE2016, which is a re�ection of its
overall dominance in transaction activity. Approximately one
third of national sales transactions across all price levels are
in Auckland.
Demand from tenants for o�ce space in Auckland is at
all-time highs re�ecting the extended period of buoyant
economic activity fuelling employment in the services sector
and ‘white-collar’ jobs. The overall Auckland CBD o�ce
vacancy rate is at 5.8 per cent, the lowest recorded by
Colliers International in two decades. Metropolitan Auckland
is also experiencing heightened levels of demand for o�ce
space with a vacancy of 6.2 per cent in March 2016, the
lowest in eight years.
Colliers International’s investor con�dence survey shows that
sentiment for the Auckland o�ce sector is at record highs. A net
positive (optimists minus pessimists) 70.8 per cent of investors
surveyed are con�dent in the sector’s performance across
occupancy rates and rental and capital appreciation for the next
12 months. This is the highest level of con�dence across the
entire commercial property sector in Auckland, and the highest
rate recorded since the survey began in early 2006.
FLAGSHIP OFFICE PREMISES
IN HIGH DEMAND
The o�ce sector punches above its weight in the NZD
$5 million and over category. Analysis of provisional data
for the �nancial year to June 2016 (FYE2016) showed 40
properties transacted aggregating to NZD $2.3 billion. This
represents more than half of total sales value and volume for
all commercial and industrial properties worth NZD $5 million
or more in New Zealand.
Flagship o�ce premises are highly attractive to local
and o�shore parties. Portfolios of buildings with strong
fundamentals such as occupancy, lease terms and low capital
expenditure requirements are seldom available.
We have seen a number of local listed sector vehicles recycle
assets in the past two (2) years to pursue new development
opportunities. This has created new purchasing opportunities in
a market that is tightly held by a small number of parties. There
have also been an increasing number of new developments
brought to market which have generated signi�cant interest
amongst o�shore and local purchasers as well as syndicators.
Five (5) recent major o�ce purchases, aggregating to more than
NZD $500 million, have been purchased by syndicators who
remain active in this low interest rate environment.
NZ OFFICE OVERVIEW New Zealand’s o�ce sector continues to provide investors with solid return pro�les
supported by positive underlying fundamentals. This is attracting new and old to the
sector which saw a buoyant period of purchasing activity over the FYE2016.
BUILDINGS A & B, 2 GRAHAM ST, AUCKLAND: Sold by
Colliers International NZ to August Funds Management
Ltd on behalf of Mansons TCLM for $204,189,354
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NOT ALL OF THE ACTION IS IN AUCKLAND
Investors in Wellington commercial office properties are also in a positive mood. Although lower than Auckland with a net positive 29.9 per cent, this is the highest of all commercial sectors in Wellington and the highest recorded since the Wellington survey began in mid-2008.
The increasing level of positive sentiment has been building in Wellington over the past couple of years and has translated into real purchasing activity. In the last two years to June 2016, there were 21 office properties sold in Wellington worth NZD $5 million or more, aggregating to NZD $695 million.
INVESTMENT DRIVERS FOR OFFSHORE AND ONSHORE PURCHASERS
After property fundamentals and economic growth, asset appreciation was signalled as the third most important feature of a real estate market in the latest Colliers International Global Investor Sentiment survey.
In New Zealand, asset values recovered in 2010 after the decline in 2008, but were relatively static until 2012. The key to the most recent uplift in values over the past few years and especially in FYE2016 has been the rise in cash flows from rent increases combined with firming cap rates.
In a review of major cities in the US, Europe, Asia, Australia and New Zealand, prime average commercial office yields in Auckland, Wellington and Christchurch were typically higher than many global counterparts.
However, the decrease in yields to record lows across most sectors has been a key component of asset value appreciation. Enabling purchasers to bid higher has been the relative spread between borrowing costs and prime property yields. There is currently a 200 to 250 basis point spread, which is higher than many major offshore markets.
The ‘lower for longer’ inflation and interest rate environment, the weight of money chasing limited prime stock in New Zealand and the positive economic and property fundamentals, signals further yield firming, rising rents and asset appreciation.
WHERE CAN WE GO FROM HERE?We are now in the eighth year of a property cycle, which in the past, has typically lasted between seven and 10 years, with varying degrees of severity when it changes.
However, there are 10 key features that suggest we are far from the risks of an overheated market and these also point to an extended pattern of buoyant investment activity being likely to continue. In no particular order those features are:
• Global economic risks are well defined
• The Reserve Bank of New Zealand and credit agencies continue monitoring and mitigating risks for financial instability
• Investors are not overconfident or overcommitted
• Sales activity is justified on current economic and property fundamentals
• Asset values are appreciating modestly from positive cash flow and capital returns
• New Zealand yield levels are still higher than many major overseas markets
• The spread between debt costs and property returns will remain lucrative for longer
• There is limited political risk and high levels of transparency
• A positive demographic environment for commercial sales activity now and the future, and
• New Zealand is increasingly becoming a globally attractive, more liquid property market, increasing the depth in our transaction market.
PRIME OFFICE INVESTMENT SALES METRICS
AVERAGE YIELDS (%)
Q2 2015 Q2 2016 Change
Auckland 7.18% 6.84% -0.34%
Wellington 7.97% 7.19% -0.78%
Average 7.57% 7.01% -0.56%
AVERAGE CAPITAL VALUES ($/M²)
Q2 2015 Q2 2016 Change
Auckland $5,900 $6,535 + $635
Wellington $4,455 $5,035 + $580
Average $5,178 $5,785 $607Source: Colliers International Research
Source: Colliers International Research, CoreLogicNote: Property sales of NZD $5m or more only. Provisional data for FYE2016
FYE2015 FYE2016
$2,500
$2,000
$1,500
$1000
$500
$0
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MAJOR OFFICE SALES BY VALUE
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OFFICE EDITION
447 COLLINS STREET, MELBOURNE: Cbus Property's $1.25 billion twin-tower mixed
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The outlook of a low interest rate environment, and the
overall competition for return is likely to continue to verify the
anticipation of an investment environment that is ‘lower for
longer’. Nonetheless, the silver lining for return outlook is that
we may see some modest improvements in internal rates of
return (IRR) in our major markets of Sydney and Melbourne
VALUATION OUTLOOK Despite the uncertainty surrounding “Brexit” and the implications associated with this geo-
political event, demand for quality Australian o�ce assets remains strong, continuing to be sought
by a broad cross section of domestic and o�-shore capital. This demand however remains
predominately unsatis�ed, with limited opportunity to acquire – be it in an on or o� market capacity.
As we move into H2, we are at that interesting point of the cycle where there is a relatively short
period of paired bene�t – with further compression of yields in combination with a strengthening
forecast for rental growth, a dynamic that sees a relatively short but strong push on capital value
appreciation. As we move into Q3 and Q4 of this year, we anticipate to see yields stabilise, with
capital value appreciation being driven to a greater degree by forecast rental growth.
By Dwight Hillier: Managing Director, Valuation & Advisory Services, Colliers International
over the next 12-24 months, dependant of course on the
strength and longevity of the outlook for rental growth in the
respective markets.
From a global comparison perspective on a face yield basis,
Australia provides anywhere between 100-150 basis points
BARRANGAROO, SYDNEY: Valued by Colliers International's
Valuation & Advisory Services on behalf of Lendlease
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cohort at this point in time for asset acquisition in Perth.
As for metropolitan o�ce markets, the quality assets
within the more prominent suburban location of Sydney
and Melbourne have seen material capital growth, as these
markets have been the bene�ciary of the yield di�erential
between core CBD’s. Like the CBD’s these markets have
also seen a steady increase in e�ective rentals since early
2016. Further yield compression is anticipated for these
quality metropolitan assets as the opportunity for CBD based
investment will continue to tighten.
For the second half of 2016, we anticipate the stand out
performer to be Sydney CBD Core precinct B Grade assets.
Owing to the removal of over 60,000m² of B Grade stock
associated with the compulsory acquisition of buildings for
the construction of the Sydney Metro railway, combined
with up to 300,000m² of additional B Grade o�ce space
earmarked for conversion to residential, this dwindling supply
is already and will continue to see strong e�ective rental
growth over the next 24 plus months.
of yield or return advantage over other major global o�ce
markets, however with the reality of the signi�cance of
our tenant incentive levels, our real advantage is reduced
to approximately 25-50 basis points on a pure e�ective
yield comparison basis. On the global stage our key o�ce
markets of Sydney and Melbourne remain very strong
contenders for the battle for the allocation of capital,
with our other point of di�erence to many global markets
being the relatively long term revenue streams with �xed
review structures, particularly attractive to pension based
investment funds.
For secondary Australian CBD o�ce markets, including
Brisbane and Perth, the outlook is not as alluring as that
of Sydney and Melbourne. With the prevailing high level
of o�ce vacancy anticipated to remain for at least the
medium term for Brisbane and Perth, we do not anticipate
strong capital value growth in these markets over the
corresponding period. The exception to this however is
those assets which are modern and well leased with long-
term annuity style revenue streams, which will continue to
be sought by both domestic and o�-shore capital.
The general consensus is that Perth still has some further
correction to go in terms of its rental market before it can
be con�rmed that it has ‘bottomed out’. Opportunistic
private and syndicated capital remain the dominate market
Sydney CBD Core precinct B Grade assets
anticipated to be the stand out performer
for the �rst half of FYE2017.
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The macroeconomic factors supporting investment in our office markets are certainly there, but what about financial indicators, the other key determinant of capital inflows to markets? Access to our office markets remains both open and transparent for both onshore and offshore buyers. Foreign buyers often comment on the transparency our market provides as being a key factor in their decision to invest here. Capital costs domestically at least have risen slightly as bank margins have increased due to some tightening by regulatory authorities. We could also argue that this is a positive for commercial property, as risky bank lending has been the key precipitator to previous property downturns. This factor certainly isn’t apparent in this cycle. Finally, return on capital is still healthy although it is expected that domestic institutions in particular will be refining their return benchmarks over the next 12 months to compete with global capital.
Our office markets are dominated by knowledge and service intensive industries – the FIRE industries, business services, government and to a growing extent education, health and technology sector occupiers. In their excellent report ‘Building the Lucky Country, The purpose of place Reconsidered’4, Deloitte describes the purpose of place in knowledge economies, and that even in a world of instant global connectivity, knowledge workers need to work in close proximity to achieve productivity gains. What this means is that our major office markets will play an even greater role in the economic growth of our country going forward.
On the supply side, after years of slow growth in this area, investment in infrastructure in our major capital cities is finally underway – the Sydney Light Rail project and Melbourne Metro Rail Project key amongst these. These projects, and others around the country, will help our cities operate more efficiently. Private sector investment wishing to capitalise on the value uplift that these projects provide is already following.
INVESTMENT OUTLOOK
POPULATION GROWTH FORECASTS
3 United Nations, Department of Economic and Social Affairs, World Population Prospects, the 2015 Revision
4 Deloitte, The purpose of place Reconsidered, Building the Country #5, 2015
The Australian macroeconomic environment is in a unique expansionary position, with both demand and supply side factors in major growth phases. The best long term demand indicator for all classes of property is population growth. Over both the 10 years to 2025 and to 2035, Australia outperforms all our major competitor markets on this indicator alone. Australia’s population is forecast to grow by 1.2 per cent per annum to 2025 and a further 1.0 per cent per annum to 20353. In the longer term, the major global markets have forecast population growth rates well below this averaging 0.5 per cent to 2025 and 0.2 per cent to 2035. History tells us that the vast majority of population growth particularly that growth which emanates from overseas migration occurs in Sydney and Melbourne and we expect this to continue. By 2056, both Sydney and Melbourne are forecast to have surpassed a population of 8 million, up from 4.9 million and 4.6 million respectively in 2016.
FYE2025 FYE2035
-0.5%
-0.3%
0.0%
0.3%0.3%0.4%0.4%
0.6%0.6%0.5%
0.7%0.7%
1.0%
1.1%1.2%
0.4%
1.5%
1.0%
0.5%
0.0%
-0.5%
Source: Colliers International / United Nations Department of Economics and Social Affairs
AVER
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ANNU
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AUSTRALIA FRANCE JAPANCHINAUSASINGAPORE HONG KONG UK
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DETAILED TRANSACTION LIST
FYE2016 SALES
QLD SALES TOTAL
$1.88 BILLION
ACT SALES TOTAL
$548 MILLION
WA SALES TOTAL
$681 MILLION
SA SALES TOTAL
$354 MILLION
NSW SALES TOTAL
$8.15 BILLION
VIC SALES TOTAL
$4.3 BILLION
%
%%%
%
%
28.5
11.942 3
49.7
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ADDRESS SUBURB STATE SALE TYPE PRICE STAKE SALE DATE
INITIAL YIELD $/M² VENDOR PURCHASER
NEW SOUTH WALES
Hickson Rd Sydney NSW Investment Sale c$560,000,000 25% Dec-15 c$20,650 HKMA
1 Shelley St Sydney NSW Investment Sale $525,000,000 100% May-16 4.9% $15,158 Brookfield Property Partners
Charter Hall JV Morgan Stanley
420 George St Sydney NSW Investment Sale $442,500,000 75% Apr-16 5.3% c$15,655 Fortius Funds Management
Investa Property Group
400 George St Sydney NSW Investment Sale c$417,000,000 50% Jul-15 4.7% c$16,294 Investa Office Trust (MSREI)
China Investment Corp
225 George St Sydney NSW Investment Sale c$355,000,000 25% Jul-15 4.4% c$16,700 Investa Office Trust (MSREI)
China Investment Corp
1 Woolworths Way Bella Vista NSW Investment Sale $336,450,000 100% Mar-16 6.1% $7,505 Mirvac Funds Mgmt Taejin Ji
255 Elizabeth St Sydney NSW Investment Sale c$320,000,000 100% Jul-15 7.0% c$11,250 Investa Office Trust (MSREI)
China Investment Corp
100 Arthur St North Sydney NSW Investment Sale $315,000,000 100% Mar-16 6.2% $11,583 Salteri family Ascendas-Singbridge
273 George St Sydney NSW Investment Sale $279,500,000 50% Dec-15 5.2% $12,067 MTAA PAG
55 Market St Sydney NSW Investment Sale c$270,000,000 100% Jul-15 5.2% c$11,780 Investa Office Trust (MSREI)
China Investment Corp
Locomotive St Eveleigh NSW Investment Sale $263,000,000 100% Dec-15 5.8% $4,614 NSW Government Mirvac Group JV SunSuper JV AMP
Capital Wholesale Fund
126 Phillip St Sydney NSW Investment Sale c$240,000,000 25% Jul-15 4.9% c$22,673 Investa Office Trust (MSREI)
China Investment Corp
31 Market St Sydney NSW Investment Sale c$238,000,000 100% Jul-15 6.4% c$9,570 Investa Office Trust (MSREI)
China Investment Corp
207 Pacific Hwy St Leonards NSW Investment Sale $160,755,000 100% Jul-15 7.2% $8,056 Primewest JV Valad Property Group
Altis Property
77 King St Sydney NSW Investment Sale $160,000,000 100% Jan-16 5.8% $11,747 Keppel REIT Invesco Real Estate
233 Castlereagh St Sydney NSW Investment Sale $156,000,000 100% Oct-15 6.4% $1,134 GDI Property Trust Visionary Investment Grp
Pier St Sydney NSW Investment Sale $150,000,000 50% Oct-15 6.0% $11,538 Lend Lease First State Super
Pier St Sydney NSW Investment Sale $150,000,000 50% Oct-15 6.0% $11,538 Lend Lease Australian Prime Property Fund Commercial (APPFC)
179 Elizabeth St Sydney NSW Investment Sale $148,800,000 100% Jan-16 7.0% $9,967 LaSalle Investment Management
Markham Corporation
110 Goulburn St Sydney NSW Investment Sale $148,500,000 100% Oct-15 6.0% $10,572 Kinder Investments Commerzbank
153-159 Clarence St Sydney NSW Investment Sale $140,000,000 100% Sep-15 6.0% $5,833 St Hilliers Eureka Funds Mgmt OBO Union Investment
821-843 Pacific Hwy Chatswood NSW Investment Sale $139,525,000 50% May-16 6.9% $6,378 DEXUS JV GPT Wholesale Office Fund
Centuria Capital Ltd JV BlackRock
80 Pacific Hwy North Sydney NSW Investment Sale c$127,000,000 100% Jul-15 7.6% c$9,300 Investa Office Trust (MSREI)
China Investment Corp
201 Pacific Hwy St Leonards NSW Investment Sale $115,000,000 100% Aug-15 8.5% $6,937 Challenger Life Abacus Property Group JV Goldman Sachs
78 Waterloo Rd North Ryde NSW Investment Sale $106,000,000 100% Nov-15 6.3% $7,225 CorVal Partners Mapletree
Garden St Eveleigh NSW Investment Sale $104,000,000 100% Dec-15 8.1% $5,267 NSW Government Centuria Capital Ltd
80 Waterloo Rd North Ryde NSW Investment Sale $101,000,000 100% Dec-15 N/A $14,710 Centuria Capital Ltd Undisclosed
NSW SALES
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ADDRESS SUBURB STATE SALE TYPE PRICE STAKE SALE DATE
INITIAL YIELD $/M² VENDOR PURCHASER
NEW SOUTH WALES
80 Waterloo Rd North Ryde NSW Investment Sale $101,000,000 100% Dec-15 N/A $14,710 Centuria Capital Ltd Undisclosed
181 Miller St North Sydney NSW Investment Sale $101,000,000 100% Apr-16 $8,417 LIF Pty Ltd NSW Government
175-181 Castlereagh St Sydney NSW Investment Sale $98,000,000 100% Dec-15 9.5% $8,264 Centuria Capital Ltd NSW Government
19 Harris St Sydney NSW Investment Sale $91,919,000 100% Jul-15 7.0% $6,566 LaSalle Investment UBS JV Grocon
33 Berry St North Sydney NSW Investment Sale $90,000,000 100% Oct-15 7.2% $7,826 Horaco Property Australian Catholic University
203 Pacific Hwy St Leonards NSW Investment Sale $86,050,000 50% Oct-15 8.0% $7,347 Challenger Life Centuria Metropolitan JV Centuria Capital Ltd
117 Clarence St Sydney NSW Investment Sale $81,000,000 100% Dec-15 6.2% $6,443 Altis Property Roxy-Pacific
10 Dawn Fraser Ave Sydney Olympic Park
NSW Investment Sale $80,000,000 100% Mar-16 11.8% $3,427 Real I.S. AG Sandran Pty Ltd
520 Smollett St Albury NSW Investment Sale $64,800,000 100% Oct-15 7.0% $6,020 CorVal Partners OBO Andrew Roberts
FG Asset Management
20 Berry St North Sydney NSW Investment Sale $60,000,000 Jul-15 7.3% $6,171 Robert Magid Yuhu Group
160 Sussex St Sydney NSW Investment Sale $57,350,000 100% Oct-15 7.6% $6,369 JP Morgan Asset Management
Burcher Property Group
1-3 Smail St Sydney NSW Investment Sale $56,000,000 100% Dec-15 6.3% $6,875 Anton Capital Mirvac Group
36 George St Burwood NSW Investment Sale $47,500,000 50% Sep-15 $6,700 DEXUS Office Trust JV CPP Investment Board
Holdmark Developers
2-6 Cavill Ave Ashfield NSW Investment Sale $47,000,000 100% Aug-15 $4,435 Graf Family Barana Group
1 Lucknow Rd North Ryde NSW Investment Sale $47,000,000 100% Feb-16 7.8% $4,595 Blackstone Grosvenor Group JV Propertylink
1 City View Rd Pennant Hills NSW Investment Sale $40,000,000 100% Sep-15 8.0% $4,940 CorVal Partners Pitt Street Securities
1-3 Munn St Sydney NSW Investment Sale $40,000,000 100% Dec-15 2.3% $10,409 Primary Health Care Undisclosed
93 George St Parramatta NSW Investment Sale $37,243,000 100% Oct-15 8.0% $5,226 Marprop F Hannan Properties
223-237 Liverpool Rd Ashfield NSW Investment Sale $35,000,000 100% Sep-15 7.5% $3,610 PAG GDI Property Group
61 York St Sydney NSW Investment Sale $33,000,000 100% Feb-16 4.8% $12,373 Nick Manettas Undisclosed
64-76 Kippax St Surry Hills NSW Investment Sale $31,500,000 100% Sep-15 4.3% $5,763 Susan Carleton & Michael Lunzer
Undisclosed
9 George St Parramatta NSW Investment Sale $30,000,000 100% Sep-15 8.0% $5,478 Hyperion Property Syndicates
Hadley Green
332 Pitt St Sydney NSW Investment Sale $30,000,000 100% Feb-16 $13,806 Visionary Investment Grp
39-41 Chandos St St Leonards NSW Investment Sale $30,000,000 100% Oct-15 4.7% $6,497 Markham Corporation Holdmark Developers
166 Epping Rd Lane Cove West
NSW Investment Sale $28,000,000 100% Oct-15 9.0% $3,928 Quintessential Equity Epic Doncaster
245 Castlereagh St Sydney NSW Investment Sale $25,000,000 100% Feb-16 $8,333 RSL Visionary Investment Grp
7 City View Rd Pennant Hills NSW Investment Sale $25,000,000 100% Nov-15 $3,509 Pitt Street Securities
2 Chandos St St Leonards NSW Investment Sale $23,500,000 100% Aug-15 4.5% $5,103 College of Law Landan Development Pty Ltd
15 Orion Rd Lane Cove NSW Investment Sale $21,000,000 100% Jan-16 6.7% $2,099 Undisclosed Intrasia Oxley
81-85 Flushcombe Rd Blacktown NSW Investment Sale $20,600,000 100% Feb-16 9.4% $2,424 Denison Group Blacktown Council
17-21 Macquarie St Parramatta NSW Investment Sale $20,000,000 100% Sep-15 5.3% $4,236 Caleven Pty Ltd Paul Lederer
28 Rodborough Rd Frenchs Forest
NSW Investment Sale $20,000,000 100% Feb-16 $4,020 Thyra Investment Management
Ossen Pty Ltd
NEW SOUTH WALES TOTAL $8,152,517,000 A Co
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VIC SALES
ADDRESS SUBURB STATE SALE TYPE PRICE STAKE SALE DATE
INITIAL YIELD $/M² VENDOR PURCHASER
VICTORIA
121 Exhibition St Melbourne VIC Investment Sale $675,000,000 50% Dec-15 5.0% $10,709 Brookfield Property Partners
Blackstone
120 Collins St Melbourne VIC Investment Sale $401,000,000 50% Jul-15 4.8% $12,369 Investa Office Trust (MSREI)
China Investment Corp
161 Collins St Melbourne VIC Investment Sale $277,000,000 100% Dec-15 7.5% $6,425 Sachsenfonds Pembroke Real Estate
600 Bourke St Melbourne VIC Investment Sale $245,000,000 43% Dec-15 5.8% $8,700 Brookfield Property Partners
AMP Capital Investors
Como Centre South Yarra VIC Investment Sale $236,500,000 100% Jun-16 7.0% $7,508 Mirvac Newmark Capital
222 Exhibition St Melbourne VIC Investment Sale $231,000,000 100% Aug-15 5.9% $7,626 AMP Capital Investors LaSalle Investment
120 Spencer St Melbourne VIC Investment Sale $165,000,000 100% Apr-16 7.0% $4,961 Stamoulis Property Group Anton Capital OBO Goldman Sachs
75 Dorcas St South Melbourne VIC Investment Sale $166,000,000 100% Jun-16 6.6% $6,972 Sachsenfonds Growthpoint (AUS)
913 Whitehorse Rd Box Hill VIC Investment Sale $156,000,000 100% Aug-15 6.1% $6,860 Cromwell FG Asset Management
30 Convention Centre Pl Melbourne VIC Investment Sale $155,000,000 100% Dec-15 6.5% $7,454 Deka-Immobilien Global CBRE Global Investors OBO BVK
114 William St Melbourne VIC Investment Sale $125,000,000 100% Aug-15 5.2% $5,941 Kyko Group Straits Trading
1 Collins St Melbourne VIC Investment Sale $125,000,000 100% Feb-16 5.2% $9,038 Overland Properties Stamoulis Real Estate
460 Lonsdale St Melbourne VIC Investment Sale $98,000,000 100% Aug-15 5.7% $8,438 REST Industry Super Undisclosed
636 St Kilda Rd Melbourne VIC Investment Sale $87,500,000 100% Dec-15 6.7% $5,132 Blackstone AMP Capital Investors
452-484 Johnston St Abbotsford VIC Investment Sale $88,888,888 100% Jun-16 6.0% $5,362 Computershare LYZ Property Group
690 Springvale Rd Mulgrave VIC Investment Sale $87,600,000 100% Mar-16 7.1% $4,146 Frasers Property Stockland
530 Springvale Rd Glen Waverley VIC Investment Sale $83,000,000 100% Aug-15 7.2% $4,929 MarksHenderson
380 Docklands Dr Docklands VIC Investment Sale $80,400,000 100% Nov-15 6.9% $6,596 Private LaSalle
55 King St Melbourne VIC Investment Sale $78,500,000 100% Dec-15 6.0% $6,453 LaSalle Investment Charter Hall Core Plus Office Fund
211 Wellington Rd Mulgrave VIC Investment Sale $50,900,000 100% Nov-15 7.3% $4,944 Frasers Property JV CIP Growthpoint (AUS)
658 Church St Richmond VIC Investment Sale $45,500,000 100% Mar-16 7.4% $5,710 Frasers Property BlackRock
658 Church St Richmond VIC Investment Sale $45,500,000 100% Mar-16 7.2% $5,761 Frasers Property BlackRock
277 William St Melbourne VIC Investment Sale $45,000,000 100% Aug-15 $2,738 Stamoulis Property Group EG Funds Management
973 Nepean Hwy Bentleigh VIC Investment Sale $41,500,000 100% Aug-15 8.7% $3,471 JAK Investment Group Henkell Brothers Investment Managers
606 St Kilda Rd Melbourne VIC Investment Sale $40,000,000 100% Feb-16 7.0% $4,625 Malcolm Dumenil Bayley Stuart
425 Collins St Melbourne VIC Investment Sale $39,000,000 100% Sep-15 5.1% $7,248 Halim Group AMP Capital Investors
2 Luton Ln Hawthorn VIC Investment Sale $37,360,000 100% Mar-16 6.9% $6,600 Bricktop
533 Little Lonsdale St Melbourne VIC Investment Sale $35,250,000 100% Mar-16 6.0% $5,342 Vantage Asset Mgmt Fidinam Group
261 Salmon St Port Melbourne VIC Investment Sale $35,000,000 100% Jun-16 7.4% $3,596 Altis Property Bob Jane Corporation
395 Little Collins St Melbourne VIC Investment Sale $35,000,000 100% Feb-16 $6,054 Lee Tai Enterprises Shakespeare Property Group (Yong Quek)
180-188 Burnley Street Richmond VIC Investment Sale $31,200,000 100% Oct-15 7.3% $5,615 Sarrin Pty Ltd Rufolo Pty Ltd
520 Bourke St Melbourne VIC Investment Sale $25,000,000 100% Dec-15 4.0% $4,373 Subramaniam Sivarajah Fife Capital
51 Queen St Melbourne VIC Investment Sale $25,000,000 100% Jun-16 5.0% $4,956 Majlis Amanah Rakyat Undisclosed
244-248 Flinders St Melbourne VIC Investment Sale $25,000,000 100% Oct-15 $1,147 Yooralla Undisclosed2015
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ADDRESS SUBURB STATE SALE TYPE PRICE STAKE SALE DATE
INITIAL YIELD $/M² VENDOR PURCHASER
VICTORIA
31 Vision Dr Burwood East VIC Investment Sale $24,250,000 100% Aug-15 7.4% $3,770 Dennis Milin Ortello Investments
31-47 Joseph St Blackburn North VIC Investment Sale $23,980,000 100% Sep-15 7.3% $2,713 Peter Anastasiou Jingyi Ye
11 Dorcas St South Melbourne VIC Investment Sale $23,280,000 100% Mar-16 6.0% $5,992 Undisclosed
406 Collins St Melbourne VIC Investment Sale $23,100,000 100% Jan-16 4.4% $6,150 Dorian Ribush Jomelan Nominees
11 Dorcas St South Melbourne VIC Investment Sale $23,280,000 100% Mar-16 6.0% $5,992 Undisclosed
406 Collins St Melbourne VIC Investment Sale $23,100,000 100% Jan-16 4.4% $6,150 Dorian Ribush Jomelan Nominees
27-35 Little Bourke St Melbourne VIC Investment Sale $23,000,000 100% Apr-16 $21,043 Daryl Jackson Undisclosed
Stud Rd Rowville VIC Investment Sale $21,700,000 100% Mar-16 $947 Frasers Property IOOF
172-186 Moreland Rd Brunswick VIC Investment Sale $20,950,000 100% Jul-15 6.5% $4,967 Paul Marks Castlerock
45 Assembly Dr (Lot M) Dandenong South VIC Investment Sale $20,750,000 100% Dec-15 7.0% $4,621 Cbus Property IOOF
VICTORIA $4,298,608,888
QUEENSLAND
300 Queen St Brisbane QLD Investment Sale $188,000,000 100% Apr-16 6.9% $9,709 Seymour Group ARA Asset Management
900 Ann St Fortitude Valley QLD Investment Sale $170,000,000 100% Aug-15 6.5% $8,858 Consolidated Properties Charter Hall
41 George St Brisbane QLD Investment Sale $159,800,000 100% Jan-16 8.7% $5,334 QIC AEP IM
313 Adelaide St Brisbane QLD Investment Sale $125,400,000 100% Sep-15 7.1% $8,594 FA Pidgeon & Son Deutsche AWM - Germany
410 Ann St Brisbane QLD Investment Sale $108,088,234 100% Jul-15 7.4% $4,972 Investa Office Trust (MSREI) China Investment Corp
100 Skyring Ter Newstead QLD Investment Sale $93,100,000 50% Mar-16 6.5% $7,546 PSP Investments Charter Hall Direct Office Fund
545 Queen St Brisbane QLD Investment Sale $82,000,000 100% Aug-15 11.0% $6,038 GPT Group Private (offshore)
201 Charlotte St Brisbane QLD Investment Sale $81,571,082 100% Oct-15 8.8% $6,070 Private (domestic) Fortius Funds Management
15 Butterfield St Herston QLD Investment Sale $81,470,000 100% Apr-16 7.0% $7,239 Clive Berghofer Australian Unity
315 Brunswick St Fortitude Valley QLD Investment Sale $79,000,000 100% Oct-15 8.8% $4,060 Forwin International Ashe Morgan
108 Wickham St Fortitude Valley QLD Investment Sale $79,000,000 100% Aug-15 8.4% $6,660 Primewest Centennial Property
Group
203 Robina Town Centre Dr Robina QLD Investment Sale $70,050,000 100% Jul-15 8.4% $5,467 Robina Land Corp Sentinel Property Group
10 Browning St South Brisbane QLD Investment Sale $65,500,000 100% Jun-16 8.0% $841 Armada Funds
Management Forza Capital
62-80 Ann Street Brisbane QLD Investment Sale $63,000,000 100% Jun-16 16.2% $2,960 Queensland Investment Corporation Wee Hur Holdings Limited
151-171 Roma St Brisbane QLD Investment Sale $62,600,000 50% Mar-16 8.8% $3,836 GPT Group Australian Prime Property Fund (Commercial)
28 Macgregor St Upper Mt Gravatt QLD Investment Sale $57,100,000 100% Dec-15 8.2% $3,997 Private LaSalle Investment
Management
QLD SALES
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ADDRESS SUBURB STATE SALE TYPE STAKE PRICE SALE DATE
INITIAL YIELD $/M² VENDOR PURCHASER
QUEENSLAND
100 Wickham St Fortitude Valley QLD Investment Sale $50,000,000 100% Sep-15 10.4% $3,816 Fortius Funds
Management Keystone
50 Cavill Ave Surfers Paradise QLD Investment Sale $48,750,000 100% Dec-15 6.6% $2,943 Chung Gold Coast GDI Property Group
99 Melbourne St Brisbane QLD Investment Sale $38,750,000 100% Oct-15 7.6% $6,267 Primewest Credit Suisse
308 Queen Brisbane QLD Investment Sale $37,400,000 100% Jun-16 8.0% $8,101 Unity Pacific Primewest
1 & 3 Breakfast Creek Rd Newstead QLD Investment Sale $36,270,000 100% Aug-15 8.1% $5,197 Primewest Private (Domestic)
179 North Quay Brisbane QLD Investment Sale $34,279,736 100% Nov-15 7.5% $3,966 PAG Perri Projects
38 Limestone St Ipswich QLD Investment Sale $32,000,000 100% Nov-15 9.2% $4,454 Trident Corporation Elanor Investors
527 Gregory Ter Fortitude Valley QLD Development $31,000,000 100% Sep-15 7.3% $4,187 Cromwell Kingsford Development
Pte Ltd
11 Stanley St South Brisbane QLD Investment Sale $26,300,000 100% Sep-15 6.2% $7,987 La Salle Investment
ManagementAMP Capital Wholesale
Australian Property Fund
7 Brandl Street Eight Mile Plains
QLD Investment Sale $25,500,000 100% Apr-16 7.6% $4,844 Industria Undisclosed
461-473 Lutwyche Rd Lutwyche QLD Investment Sale $22,500,000 100% Aug-15 7.2% $4,569 Harvest Property FF Lutwyche Pty. Ltd.
114 Brisbane St Ipswich QLD Investment Sale $22,350,000 100% Jul-15 8.4% $4,897 Cryton JV Macknade Investments Pty Ltd JV
Rohrig Investments Pty Ltd
Trilogy Funds
QUEENSLAND TOTAL $1,881,479,052
AUSTRALIAN CAPITAL TERRITORY
25 Cowlishaw St Greenway ACT Investment Sale $235,547,717 100% Dec-15 5.9% $9,728 Amalgamated Property Group
Challenger OBO FG Asset Management JV Korea Investment Holdings
134 Reed St Tuggeranong ACT Investment Sale $75,000,000 100% Dec-15 8.0% $4,913 Record Realty AKA Allco Finance Group
Juilliard Group
255 London Circuit Canberra ACT Investment Sale $70,025,000 100% Dec-15 6.5% $7,639 Emboss Capital OBO Brompton Asset Mgmt
Growthpoint (AUS)
16 Furzer St Woden ACT Investment Sale $68,071,576 100% May-16 9.0% $4,596 Mirvac Patella Holdings
14 Mort St Canberra ACT Investment Sale $41,500,000 100% Mar-16 7.5% $4,422 GIC (Govt of Singapore) JV PSP Investments
JV Charter Hall
Ascot Capital
73 Northbourne Ave Canberra ACT Investment Sale $29,200,000 100% Apr-16 9.0% $4,777 Hume Property Partners South Haven Group
33 Allara St Canberra ACT Investment Sale $29,000,000 100% Dec-15 $1,124 360 Capital Office Fund Molonglo Group
AUSTRALIAN CAPITAL TERRITORY TOTAL $548,344,293
ACT SALES
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SA SALES
WA SALES
WESTERN AUSTRALIA
221 St Georges Ter Perth WA Investment Sale $215,000,000 100% Jan-16 $7,249 Insurance Commission of WA
Perth Upper China
2 The Esplanade Perth WA Investment Sale $110,000,000 50% Dec-15 $6,707 Colonial First State Primewest
45 Francis St Northbridge WA Investment Sale $101,000,000 100% Aug-15 12.1% $4,588 Deka Immobilien Warrington Property Group (AUS) JV Goldman
Sachs
81 St Georges Ter Perth WA Investment Sale $81,333,333 100% Dec-15 7.3% $6,858 Nick Tana ARA Asset Management Group
190 St Georges Ter Perth WA Investment Sale $63,904,767 100% Dec-15 9.2% $6,842 Terrace Properties & Investments Pty Ltd
Credit Suisse REIM
53 Ord St West Perth WA Investment Sale $59,000,000 100% Aug-15 8.0% $8,596 Primewest Mapletree Commercial Trust
12-14 The Esplanade Perth WA Investment Sale $51,000,000 100% Dec-15 9.5% $6,410 Asia Pacific Investment T2 Pty Ltd
Cape Bouvard Investments Pty Ltd
WESTERN AUSTRALIA TOTAL $681,238,100
ADDRESS SUBURB STATE SALE TYPE STAKE PRICE SALE DATE
INITIAL YIELD $/M² VENDOR PURCHASER
SOUTH AUSTRALIA
77-91 Rundle Mall Adelaide SA Investment Sale $150,000,000 100% Jan-16 6.15% $7,400 Pacific Group of Cos JV epc.Pacific
Blackstone
100 Waymouth St Adelaide SA Investment Sale $73,000,000 100% Dec-15 6.8% $5,799 Cromwell
30 Flinders Street Adelaide SA Investment Sale $63,500,000 100% Jan-16 7.9% $4,659 Prime Value Asset Management
19 Grenfell St Adelaide SA Investment Sale $39,200,000 100% Dec-15 8.5% $3,634 Shakespeare Property Group
30 Currie St Adelaide SA Investment Sale $27,875,000 100% Feb-16 8.0% $3,117 Raptis Family Prime Value Asset Management
SOUTH AUSTRALIA TOTAL $353,575,000
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Disclaimer: Colliers International does not give any warranty in relation to the accuracy of the information contained
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for any loss or damage resulting from any statement, �gure, calculation or any other information that you rely upon that is
contained in the material. COPYRIGHT 2016.
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