Deka Immobilien Investments will pay $380m for a 30-storey office tower at 66 Eagle St in the Brisbane CBD

A German property investment giant has snapped up a CBD tower despite the State Government land tax surcharge on foreign investors biting.

The Brisbane CBD office investment market kicks off 2020 with a bang.

THE Brisbane CBD office market has continued its strong run with a German property investment giant agreeing to purchase an office tower for $380 million.

Deka Immobilien Investments has exchanged contracts for the 30-storey tower at 66 Eagle St with co-owners Lendlease’s Australian Prime Property Fund (APPF) Commercial and Middle Eastern sovereign fund Abu Dhabi Investment Authority.

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The 50-50 vendors listed the tower in September in a year in which 18 CBD major office assets sold for $2.7 billion — 13 per cent higher than the previous year.

Ina statement APPF Commercial said the result followed a competitive bidding process for the asset which includes a lobby with a breathing wall, new cafe and premium-grade end-of-trip facilities.

In a statement APPF fund manager Micah Schulz said: “The dynamics of the workforce are evolving and as commercial tenants look to attract and retain the best talent, we will continue to invest in next generation precincts with a strong focus on customer experience.”

“These precincts are highly attractive to tenants and their employees as increasing value is being placed on convenience, technology, sustainability, wellbeing and community in

the workplace.”

End-of-trip facilities at 66 Eagle St.

JLL’s Seb Turnbull and Luke Billiau and Cushman & Wakefield’s Rick Butler and Josh Cullen marketed the 35,000sq m asset.

Last year there were a number of large CBD sales including Cromwell’s acquisition of 400 George Street for $525 million, Ashe Morgan’s purchase of The Complex for about $425 million, and Shayher Group buying QIC’s Queen and Albert complex for $395 million.

According to Savills research in 2019 foreign investors deployed $1.4 billion over 10 deals in the CBD market.

However, that was about $700 million less than in 2018 and at the same time foreign owners sold $1.8 billion of assets in the CBD.

Savills managing director of Queensland Anthony Ott said despite offshore activity, the State Government’s decision to impose increased land tax charges on foreign investors was factor in slowing the quantum of investment from offshore entities.

He said Savills expects to see investment demand to remain strong in 2020, however, there will be less stock available.

“Many of the domestic funds are well capitalised following successful capital raisings through 2019,” Mr Ott said.

“We expect office and industrial markets to be the primary focus for investment from these groups through 2020. Lower debt costs, reduced hedging costs, and the search for yield will see ongoing demand from offshore capital.

“The big question is how much of this capital demand will be satisfied in Brisbane given the quantum of assets that have traded over recent years and the reluctance of many vendors to sell without having sale proceeds allocated to other investment.”