Office blocks are hot property for funds

The article says purchasers are keen to enter the office market to capitalise on increased occupier demand for premium office space and the anticipated rental growth. Activity has gathered momentum since July, with major office deals and smaller transactions driving interest.

The article cites Memocorp’s purchase of 259 George Street for $395 million and Cbus’s acquisition of a half share in 5 Martin Place for $48 million—both assets were sold by the Commonwealth Property Office Fund.

Ownership of 20 Martin Place is said to be very close to changing hands, and Stockland’s half share of 52 Martin Place has been added to the stock of assets being sought by buyers.

According to CBRE’s Rick Butler in the article, major offshore groups—particularly investors from Singapore—and larger high-end domestic superannuation funds have been the most active buyers and are expected to account for the bulk of transactions.

Rick Butler, CBRE’s senior managing director for international investments, said the market had gathered momentum since July, with completion of several major office deals and a series of small- to medium-sized transactions in the retail and office sectors. He noted offshore investor sentiment was firming up after a slow start to the year.

The article notes activity in both sectors: there have been several major office deals as well as a series of small- to medium-sized transactions in the retail and office sectors.

The article explains that purchasers are particularly keen to buy office assets to capitalise on predicted rental growth—meaning buyers expect higher rentals for premium office space and are positioning to benefit from that increase.

Yes. The article reports that offshore investors—especially from Singapore—were active and that major offshore groups, along with larger domestic super funds, remain on the lookout for office assets and are likely to continue accounting for much of the transaction activity.