Property back in the spotlight with big deals on the way

Bidders are preparing for a fresh round on Melbourne’s Southern Cross Towers complex, which is being sold by the joint owners, private equity firm Blackstone and Canadian asset giant Brookfield. Picture: Gollings Photography

Property is well and truly back, with the dark pandemic days rapidly fading in the rear vision mirror.

Not only is Dexus in the final throes of negotiating the purchase of Collimate Capital’s $30bn local real-assets funds operation, the contest for major direct assets is also heating up.

In two of the latest moves, Anton Real Estate Partners has put a party into due diligence on a $150m office project in Melbourne’s CBD, in a deal being handled by real estate agencies CBRE and Knight Frank.

The city’s first deal has already been struck with a Singaporean investment house in due diligence on 120 Spencer Street.

CBRE Global Investors won a bid of about $325m on the office block, with that deal being handled by CBRE and Cushman & Wakefield.

These transactions are likely to serve as the warm-up act for what is looming as one of the biggest sales of the year.

Bidders are preparing for a fresh round on Melbourne’s Southern Cross Towers complex, which is being sold by the joint owners, private equity firm Blackstone and Canadian asset giant Brookfield.

Their offer, via Cushman & Wakefield and CBRE, will see the bulk of the $2bn-plus complex change hands as the owners capitalise on strong demand for prime long-leased assets underpinned by government tenants.

Asia-based investors will again feature in the bidding. After a muted year in 2020, outbound capital from Asia surged 69 per cent in 2021 to $US54.6bn, surpassing 2019’s pre-pandemic investment volumes.

Australia has moved up three ranks since 2019, from the fifth-largest destination for outbound real estate investments from Asia to second, closely following the top-ranking US.

Asian investors have shifted their emphasis back to this region, where they can rely on stronger networks and local expertise to execute and evaluate deals.

CBRE says Sydney is a top-four preferred destination for cross-border real estate investment. It credits the current geopolitical situation, resilient cashflows of Australian assets and current exchange rate levels.

Singaporean capital dominated Asian outbound investment, accounting for six of the top 10 outbound transactions. Singaporean investors deployed $US32bn abroad, marking a significant increase of 164 per cent, year on year.

The big Singapore houses, including sovereign fund GIC, are sure to feature among the action this year. But they are tipped to run up against equally aggressive buyers from Hong Kong, including Link REIT, which has already bought major assets in Sydney.

Asian logistics group ESR also shows no sign of slowing down and made early approaches for Collimate Capital.

But locals still feature, City of Brisbane Investment Corporation finalising a deal to buy 33 Allara Street in Canberra for $71.25m.