DEXUS property values rise $341m
The value of ASX-listed DEXUS Property Group’s portfolio of 106 office and industrial properties has increased 3.2 per cent in the half year to December 2016, squeezing capital rates marginally.
After external and internal valuations, DEXUS’ properties rose $341 million in value, resulting in the weighted average cap rate across the total portfolio tightening by 0.2 percentage points to 6.13 per cent.
“As expected our properties have seen further cap rate tightening, and it’s pleasing to see that rental growth is being reflected in our valuations at properties in Sydney and Melbourne,” DEXUS chief executive Darren Steinberg said. “The Brisbane office market is showing signs of improvement, however Perth remains challenging.
“With property fundamentals continuing to improve in Sydney and Melbourne we expect to see underlying valuation assumptions improving over the next 12 months and expect this to continue to support values in key markets.”
The weighted average cap rate of DEXUS’ office portfolio fell to 5.95 per cent in December, from 6.16 per cent in June. Its industrial portfolio weighted average cap rate fell to 7.28 per cent, from 7.38 per cent.
Growth tipped to continue
The value of DEXUS’ standout property, 30 The Bond in the Sydney CBD, rose $40 million or 18 per cent but the result was a reduction in cap rate to 5.63 per cent, from 6 per cent.
The Sydney CBD office rental market will remain robust in 2017, boding well for DEXUS which focuses mainly on offices.
“The race for space due to withdrawals and transport developments have set new benchmarks for Sydney,” JLL’s Tim O’Connor said.
“Strong inquiry and rents have also been achieved, particularly in the third quarter of 2016. We expect this positive strong growth to continue into 2017.”
