THE property developer Lend Lease Group has secured $2 billion in commitments from retirement funds and its own property fund to develop the first two towers at its Barangaroo South site, a project which ranks as one of the country's biggest property developments.
The funds will allow the development of the towers, which last month signed tenancy agreements with Westpac and KPMG to lease 71 per cent of the space in the precinct.
Lend Lease plans to create a new financial hub in Sydney after it began work on the $6 billion redevelopment project late last year. The 22-hectare site will contain 300,000 square metres of commercial floor space.
"Barangaroo South demonstrates Lend Lease's ability to provide access to high-quality, scarce development opportunities," its chief executive officer, Steve McCann, said in a statement. A further cut in interest rates "would help everybody," Mr McCann told the ABC.
Some $1 billion of the funding will be provided by the Canada Pension Plan Investment Board, which invests for the country's state retirement plans, with $500 million coming from Lend Lease's Australian Prime Property Fund Commercial (APPFC).
It is the Canadian fund's single biggest real estate investment.
The remainder of the money would be provided by Telstra Super, and First State Super, an independent retirement fund. "This is an excellent opportunity to invest in a high quality, iconic commercial waterfront real-estate development alongside Lend Lease, one of the region's top developers and APPFC, an aligned, local institutional partner," Canada Pension Plan's senior vice-president for real estate investments, Graeme Eadie, said.
"This investment supports our real-estate strategy to acquire premium, long-term assets in key global markets," Mr Eadie said.
The vacancy rate in Sydney's CBD rose to 9.6 per cent in January from 9.3 per cent in July 2011 as more than 80,000 square metres of new space was added to the market amid slower take-up, the property broker Colliers International said in a report on the industry's performance in the first half.