The imminent sale of Aviation House has renewed offshore interest in Canberra and is expected to fuel foreign buying activity around other high-ticket government assets this year.
The Mirvac Group has listed Aviation House in Woden, via Colliers International and JLL, with market expectations it will fetch more than $70 million.
Colliers International’s national director of capital markets and office leasing Tim Mutton will travel to Singapore this week to speak with potential buyers for the property.
“Canberra is on offshore buyers’ radar. There are a number of major (commercial property sale) campaigns that are soon to start and it’s about finding the right types of quality assets for overseas investors who are typically quite risk adverse,” Mr Mutton says.
Aviation House would be a strong fit for foreign superannuation funds, he says.
“Aviation House has multiple tenants which would offer safety in income and we expect its pricing to be attractive relative to other markets around the world.”
It is leased by the Civil Aviation Safety Authority and other public service agencies.
The CSIRO building in Campbell is also coming on the market soon, while the federal government is expected to sell several buildings in the Parliamentary Triangle this year.
The CSIRO building on Limestone Avenue may attract foreign investors. Photo: Andrew Sheargold
Mr Mutton says the CSIRO building due its development potential.
Knight Frank Canberra’s Associate director of institutional sales Nic Purdue says offshore investors recognise that there is strong value in Canberra relative to the pricier Sydney and Melbourne markets.
“There are good underlying economic fundamentals in Canberra, rents have stabilised, the vacancy rate is being absorbed and it’s the right environment for foreign investors to get into the market before it becomes overheated,” Mr Purdue says.
Interest was being shown from Singapore, China, Korea, the United States and Germany, Mr Purdue says.
“For a market like Singapore, they have had a strong mandate to invest a serious amount of superannuation money outside of Singapore.
“They need to find low-risk investments and that is what Canberra is good at; providing long-term government leases in relatively new buildings.”
The office and hotels markets held widespread appeal, particularly for Chinese and Korean buyers, Mr Purdue says.
“We are seeing renewed interest from German funds as well. The Germans like that the Australian and Canberra commercial market is very transparent, and also the tax position that investing in Australia gives them.”
Canberra offers US investment banks exposure to Asia in an English-speaking country, Mr Purdue says.