A local investor has paid about $40 million for a mostly vacant office tower in Parramatta, more than doubling the $18 million vendors Chandru Tolani and Sanjay Kumar paid for it in 2012.
Records show a company registered by Sydney-based Stanley Xue last week acquired the 16-18 Wentworth Street building, for a price that Ray White agent Vincent Sheu said reflected the eight-level building’s high vacancy rate.
“The majority of sales in the last 12 to 18 months have been between $8000 and $10,000 per square metre of net lettable area,” Mr Sheu told The Australian Financial Review.
“This would be just shy of that, reflecting the fact that it is over 50 per cent vacant. It does require some work to make the property more beautiful and re-let it and secure a higher rent.”
There was no meaningful yield for the purchase of the mostly empty tower. But while the 6400-square-metre building’s occupancy had taken a hit due to the COVID-19 pandemic, its central location close to Parramatta Station and Westfield Parramatta shopping centre made it a longer-term bet for the buyer, said Mr Sheu, who marketed the building with colleague Jai Sethi.
“Everyone looking at acquiring something like this in Parramatta has a mid- to long-term approach to it,” Mr Sheu said. “It may be 10 years down the track when you exercise the underlying uplift.”
In February, Mr Xue paid $52.5 million to buy a four-storey office building in Liverpool, south-west of Parramatta. The 211 Northumberland Street building is leased to Centrelink until 2022.
He is not the only investor taking a long-term view of Sydney’s growing western metropolitan regions. In April, property fund manager and developer GPT extended its foothold in the Parramatta office market, accumulating three neighbouring sites along George Street in a transaction worth about $75 million.
In November, Singaporean sovereign wealth fund GIC teamed up with ASX-listed Charter Hall to purchase Parramatta’s 15-storey Jessie Street Centre, A-grade office tower for $415 million from Canadian group Brookfield.
GIC already owned a half stake in Westfield Parramatta, which it bought from then-Westfield Group for $717.5 million in 2007.
Last month, Robert Gishen, Colliers International’s national director of office leasing, said Parramatta was likely to emerge strongly from the pandemic as there were already several tenants in the market looking for office space of between 5000 square metres and 50,000 square metres.
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