South Australia has recorded its biggest ever year of commercial property transactions, surpassing the previous high set 15 years ago.
Transaction volumes reached $1.99 billion across all commercial sectors, according to figures compiled by JLL. The previous record was $1.6 billion in 2003.
The figure is well short of the $6.03 billion worth of property sold in Queensland, $6.77 billion for Victoria and $18.34 billion for NSW during the same period.
South Australia was benefitting from the global demand for high-yielding assets, according to JLL’s South Australia managing director, Ben Parkinson.
“Attractive comparative yields to the eastern seaboard office markets and an ongoing positive occupier demand profile has resulted in an unprecedented weight of capital into the Adelaide CBD market,” he said.
The overwhelming majority of capital going into and out of the sector came from overseas buyers, said JLL’s director of research, Rick Warner.
“In 2019, offshore investors were net buyers of commercial property in SA, accounting for 61 per cent of total transaction volumes or $1.21 billion across the office, industrial and retail sectors. Conversely, offshore groups were net sellers of commercial real estate nationally in 2019 – the first time in more than a decade.”
Office, retail sector biggest contributors
Office transactions were the most significant contributor to the record result, with $799.3 million worth of properties changing hands.
The three largest office transactions in 2019 were brokered in the second half of the year: the Allianz Centre at 55 Currie Street for $148.25 million, and the Grenfell Centre at 25 Grenfell Street for $134.22 million – both to owners backed by Singaporean capital – and the SGIC/CGU building at 80 Flinders Street for $127 million.
In the retail sector, transactions trailed just behind offices at $791.8 million, despite a lack of positive sentiment.
A large part of that result was the $650 million sale of Westfield Marion, said Mr Warner.
Lendlease’s sale of its half-share in the Adelaide mall to the property trust sponsored by Singapore Press Holdings was one of the year’s most eagerly anticipated deals. Mr Warner predicted that topping $2 billion in transactions in 2020 would be an unlikely prospect without similar large-scale sales.
“This ongoing investment demand that we’ve recorded throughout the past two years is expected to carry through 2020 with the only downside risk to transaction volumes is a lack of assets brought to market throughout the next 12 months,” he said.
Industrial transactions were $395.8 million for the year.
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