Office towers show signs of life as Gina Rinehart swoops on Brisbane block

Billionaires are making their mark on the office market as it shows signs of stabilising.

The play marks another foray by Ms Rinehart into the office market. Picture: Philip Gostelow/Bloomberg

Resources tycoon Gina Rinehart is buying a Brisbane office tower for about $240m from a Charter Hall-run fund in a sign that activity is returning to the top end of office markets.

The play marks another foray by Ms Rinehart into the office market and could be used to accommodate her growing Queensland operations after she bought a smaller Brisbane block earlier this year.

Office buildings have been hit by negative sentiment and rising vacancies, but top landlords – led by Charter Hall- have pushed back against the notion of a widespread plunge in values, arguing that tenants are still keen for premium towers.

Property funds managers have been hit by higher bond rates but they received a fill-up this week amid signs rates would stabilise with shares in Charter Hall jumping more than 10 per cent on Wednesday and also lifting again on Thursday after an upbeat market assessment at its annual meeting.

For Charter Hall, the impending sale of the tower at 175 Eagle St would support the view that the best towers will come through the crisis even if some lower-grade assets come under pressure.

The deal has been subject to months of behind-the-scenes talks with the details only just emerging as the building is held by the unlisted Charter Hall Office Trust. The parties did not comment but the sale is likely to show pricing around book value in keeping with the vendor’s approach.

175 Eagle St, Brisbane CBD.

The A-Grade Eagle St building has been overhauled by Charter Hall in time it has owned it. It has 19 floors of offices, two river promenade levels with retail uses, a mezzanine level, and three basement levels of parking. Major tenants include Aurizon and AON Risk Service.

In February, Ms Rinehart made her first big office acquisition, picking up a tower in Brisbane for more than $100m. The billionaire, who owns smaller buildings in Perth, bought the block at 70 Eagle Street, from US funds group Pembroke.The office buy could prove a savvy play for the billionaire, who is already heavily invested in the state, and adds to her portfolio that also includes residential properties in Brisbane and Noosa.

Hancock has extensive investments in energy in Queensland via Senex, its joint venture with POSCO, along with extensive agricultural operations and a growing Brisbane office.

Brisbane is riding a $45bn infrastructure boom with a series of projects either under construction or in planning as the city readies for the 2032 Olympic Games.

The sale also shows that the Queensland capital remains attractive for office players, who are drawn to the higher returns and better sentiment than Sydney and Melbourne.

The office deal comes atop the billionaire’s extensive interests in rural property and her more recent forays have included assessing the purchase of famed Queensland island resorts, although deals could not be reached.

Other magnates have also bought in Brisbane. Billionaire coal baron Sam Chong last year bought another city tower, picking up a Queen St asset from US funds manager Hines for about $140m.

And some resources magnates are keen to push into new areas of property.

The Forrest family’s property division Fiveight Pty Ltd purchased the under-construction Waldorf Astoria hotel fronting Sydney’s Circular Quay, for about $520m.