Private cash takes its chance

Jones Lang LaSalle Victorian managing director Andrew Wood says a "window of buying opportunity" has opened for private investors while institutional owners continue to sell assets to repatriate debt or meet growing redemptions.

"An institutional owner may have geared their portfolios to a certain level that was fine last year, but (this year) the market is no longer happy with that debt gearing," Mr Wood said. "If institutions are selling assets then there aren't many that are available to buy, and that means the main buyers in the market are going to be privates."

Mr Wood said private investors - some of whom sold property when the market was stronger - have been waiting to seize opportunities presented by a market correction, particularly for property valued above $10 million.

JLL research shows private investors sold more than $2.64billion worth of property in 2006 and 2007, accounting for 35.75% of all sales in transactions above $5 million. Over the same period they spent only $828 million, acquiring just 11.19% of the property sold.

This meant there was a "nest egg" of nearly $1.9 billion worth of potential property investments, Mr Wood said.

Recent private investor purchases of institutionally held property include Kyko Group's $93 million purchase of 114 William Street from ISPT; GE's sale of 553 St Kilda Road to a German investor for $40 million; and AMP Capital Investor's $28.5 million sale of 570 St Kilda Road to West Australian investor Jacky Mulani. CHRIS VEDELAGO