Brisbane’s commercial property market will end the year on a high following the sale of two more office towers as vendors tie up loose ends in a pre-Christmas rush.
Capital continues to flood into the Brisbane market from both local investors and offshore groups who see relative value in the market and are left with limited opportunities in cities like Sydney and Melbourne.
While the number of office properties to have sold above $5 million so far in 2019 is the lowest it’s been since 2012, the total value, at $3.6 billion, has hit a new record high.
International funds house Deutsche Asset & Wealth Management is the latest cab off the rank, with the sale of 313 Adelaide Street, a tower in the Brisbane’s Golden Triangle, in a deal industry sources say is worth about $155 million.
The new owners, superannuation fund Prime Super and adviser Whitehelm Capital, have been active in the Brisbane market, having spent $76 million earlier this year on the Citilink Business Centre in Brisbane’s Bowen Hills.
The Adelaide Street sale, which was brokered by CBRE’s Tom Phipps, Bruce Baker and Flint Davidson, reflects a core capitalisation rate of about 5.75 per cent.
Mr Phipps said the deal highlighted increased onshore investor activity in Brisbane following the Queensland government’s decision to introduce a foreign land tax surcharge.
However, the 2 per cent land tax surcharge, currently in limbo while the state government reviews its assessment guidelines, has not curtailed interest from many overseas investors who still see relative value in that market.
Hong Kong capital is behind another deal across town, the sale of Investec Australia Property Fund’s tower at 757 Ann Street on the fringe of the CBD, for $94 million, representing a passing yield of 6.6 per cent.
“The sale affirms that despite some political headwinds, the overarching view from global capital remains positive on Brisbane because of the infrastructure boom, signs of improvement in our occupier markets and relative risk-adjusted returns comparative to the Sydney and Melbourne markets,” selling agents Mike Walsh and Peter Court, of Cushman and Wakefield, said.
Mr Walsh said in the next week their team alone had another $360 million worth of deals in Brisbane’s middle markets due to go unconditional.
The last big deal for the year in Brisbane is also expected to involve another offshore group with German fund giant Deka Immobilien in due diligence on Central Plaza 2.
IAP chief executive Graeme Katz said the fund determined it was an opportune time to sell given strong demand for high-quality office properties in the Brisbane fringe market.
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