Office market opens up as tower trades take off
The nation’s office market remains under pressure but big trades are beginning to take hold with offshore capital continuing to favour Australian towers.
Business
Don't miss out on the headlines from Business. Followed categories will be added to My News.
Australia’s office market remains under pressure but big trades are beginning to take hold with listed companies Mirvac and Dexus getting ready to offload buildings and rivals Charter Hall and the GPT Group also selling.
The groups are taking discounts in order to get the towers away, but in doing so are setting lower values across the market which is likely to stimulate further transactions.
Listed property investors have feared deep cuts to city skyscrapers, driven by high interest rates and international concerns about the office towers, mainly in the US.
But the deals in train show that offshore capital is continuing to favour Australian office towers, helping to keep discounts tight, with buyers also believing that the cycle will turn in their favour.
They still face the hurdle of getting staff back working in office blocks but many have been buoyed by a flight to quality premises and a belief that top end buildings will come through strongest.
Among the latest deals, Mirvac is finalising the sale of 60 Margaret St and MetCentre for about $820m, around an 8 per cent discount to its last value. The tower is being purchased by a consortium, including local house Ashe Morgan and Japanese heavyweight Mitsubishi Estate Asia, with capital raising being finalised, after the sale was brokered by JLL and Cushman & Wakefield.
Mirvac has also put 367 Collins St in Melbourne’s CBD into due diligence, again at a relatively tight discount. A local group representing offshore capital is the prime contender for the tower, with investment house Goldfields believed to be the contender. Cushman & Wakefield and CBRE are handling that transaction.
In Sydney, Dexus has funds house Quintessential Equity in due diligence on a tower in at 1 Margaret St for close to $300m and is close to putting several parties into due diligence on a tower at 44 Market St.
These transactions are likely to show discounts of around 15 per cent to book values reflecting the shift from boom conditions.
But local landlords have dodged the tough conditions hitting the US where office owners carry greater debt loads.
The market will be further tested by GPT’s offer of a half stake in Sydney’s Australia Square via Cushman & Wakefield and Savills and Charter Hall’s offer of buildings in Melbourne, Perth and Adelaide. Bids for Ping An Real Estate’s half stake in the $2.4bn Sydney Place at Circular Quay also close shortly.
Originally published as Office market opens up as tower trades take off
BHP’s Olympic Dam facing two-week outage
BHP faces an uphill battle to hit copper production targets at its Australian operations with its flagship Olympic Dam mine out of action until at least the start of November.
Woolies, Coles ‘fake’ discounts spread across the entire supermarket
Woolworths and Coles fooled customers into buying everyday groceries by using fake discounts spanning almost every aisle of the supermarket, new court documents reveal.