Buyers keen on CBD properties

The West Australian September 7, 2011, 6:08 am

Perth's CBD investment market has hit the ground running this year, with buyers snapping up more than $600 million of property in the first six months of the year, according to the latest research and forecast report from Colliers International.
The Perth CBD Office Market Overview, released this week, revealed CBD assets totalling $611.7 million had changed hands in the six months to June 30 - representing a whopping 207 per cent increase on the total value of sales seen over the course of the entire 2010 calendar year.
The surge in sales reflects a broader trend, with research revealing that nationally - across Sydney, Melbourne, Brisbane, Adelaide and Perth - the 2010 financial year saw 66 major transactions totalling around $4.93 billion, up from 61 transactions and $3.13 billion the previous year.
The Perth report also showed that in 2011 institutional buyers have jumped back into the market, with more than half the sales over the first six months of the year (56 per cent) involving institutions.
The remainder of the deals done during the first half of the year was split evenly between private (22 per cent) and foreign buyers (22 per cent).
Colliers International director investment services Ian Mickle said the mix of buyer profiles reflected the strength of the Perth market.
"The strength of the office leasing market in Perth, and the positive outlook going forward, has proved very appealing for investors as they look for performance assets with income growth potential," Mr Mickle said.
"For the institutional buyers, in particular, it's marked a significant turnaround. For them to jump back in at the level we've seen this year, where they're representing more than half the deals done, is a real indication of how the Perth market is being viewed by the major operators in the sector."
Two of the three CBD deals that Colliers International has been involved in this year - 99 and 182 St Georges Terrace were to foreign investors while 226 Adelaide Terrace was sold to the Motor Accident Commission of South Australia.
Forecasts of tightening vacancy levels and continued rental growth had also drawn strong interest from a cross-section of buyers.
While the strong Australian dollar is an additional barrier to foreign buyers, Mr Mickle said this was offset by the strength of the Australian economy and that most buyers would hedge the equity portion of their purchase.
With most building sales occurring off market because of their commercially sensitive nature, Mr Mickle said it was difficult to gauge the number of sales for the remainder of this year.
The report found capital values in the Perth CBD were stable, at between $9000 and $10,000/sqm for premium-grade assets. A-grade capital values were estimated to be between $8000 and $9000/sqm, while good B-grade assets had sold for around $7000/sqm.
According to IPD Australia's Property Investment Digest, annual capital growth within Perth's CBD office market increased for the fourth consecutive quarter in the three months to June 30, after shrinking in 2009 and the first half of 2010.
"The strength of the office leasing market in Perth
.Â .Â . has proved
very appealing
for investors." Ian Mickle, Colliers

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