Offices and shops snapped up in Sydney
Investors have poured close to $7 billion into the Sydney and Melbourne office and retail markets in the past year as they looked to shore up exposure to the eastern seaboard.
The assets ranged from larger shopping centres to medium-sized offices and come from a mix of domestic super funds, Australian real estate investment trusts (A-REITs) and overseas-based property securities investors.
The head of sales and investments, NSW at Jones Lang LaSalle, Paul Noonan, said investment in the Sydney central business district reached $4.29 billion in 2012 - the highest level on record since Jones Lang LaSalle began recording in 1988 - and significantly above the $2 billion of sales in 2011.
He said the sales, as reported in the group's latest Sydney CBD Investment Market Review and 2013 Outlook, were inflated by the $2 billion of capital commitment to International Towers Sydney at Barangaroo South as well as the deals recorded as part of the de-listing of the Sydney proportion of the Charter Hall Office trust.
The remaining $3 billion was in retail asset sales in both states.
"Outside of these transactions, interest in Sydney was from offshore groups and the return of super funds and A-REITs," Mr Noonan said.
Jones Lang LaSalle Victoria managing director Andrew Wood said that in Melbourne the investment market jolted into action in November 2012 after six months of relative inaction, and had enjoyed strong activity through the first quarter of 2013.
"Investment activity was revived over the last quarter of 2012, with five sales recorded for a total of $193.8 million. This brought the total investment figure for 2012 to $872.9 million."
CBRE's head of research for Australia, Stephen McNabb, said that even in the last three months sales activity had increased significantly, with about $3.5 billion in property priced over $5 million changing hands - up 15 per cent on the corresponding quarter in 2012.
"Looking at the broader trend [sales activity on a rolling four quarter basis], transaction levels were also higher, with $14.3 billion in sales reported for the 12 months to March 27, 2013. This was 1 per cent higher than the $14.2 billion in sales recorded in the 12 months to March 2012," he said.
In the list for upcoming sales are the GE Capital assets, which include 210-220 George Street and 636 St Kilda Road, Melbourne. The global investor Blackstone is said to be a front-runner for the GE Capital assets, with Mirvac and the Hong Kong-based Pacific Alliance also keen on individual buildings.
The national director of capital markets at CBRE, Josh Cullen, said the re-emergence of the Australian real estate investment trusts (A-REITs) seeking core investments across all property sectors was a positive sign for 2013.