Investors are snapping up about $450 million of north shore assets with at least four major properties being offered as the owners take advantage of the strong demand for higher-yielding bricks and mortar assets.
The forthcoming Victoria Cross Metro Station, seen as a “a game changer” within the North Sydney CBD along with unprecedented levels of activity including new office schemes and new retail and town planning initiatives to invigorate the CBD, has also encouraged the selling spree.
Chinese private trading company General Nice Group has finalised the sale of its 146 Arthur Street office tower in North Sydney for $78 million. It is said Aqualand was the likely buyer as it looks for more sites in North Sydney. Aqualand was also said to signed a conditional deal to buy the Fujitsu Centre, 15 Blue Street, North Sydney, for $168 million from Phillip Wolanski’s Denwol Group.
CBRE’s Sharon Yang negotiated the 146 Arthur Street sale in a deal that highlights growing foreign buyer interest in commercial property investment opportunities in Australia’s major capitals.
“Offshore investors are targeting not only residential sites but are increasingly attracted to income-producing assets,” Ms Yang said.
“Sydney’s strong office market fundamentals and the outlook for rental growth in satellite locations such as North Sydney has been a key drawcard.
“This has led to a significant tightening in North Sydney’s prime office yield, to 5.95 per cent as at December 2016, with offshore and domestic investors perceiving there to be good potential for further rental growth underpinned by falling vacancy rates and ongoing infrastructure improvements.”
The assets for sale include the $100 million-plus 116 Miller Street and 173 Pacific Highway, 8 West Street, North Sydney, said to be valued at over $50 million and 108 George Street, Hornsby, said to be worth between $20 to $25 million.
There are also suggestions Abacus Property is looking to sell 32 Walker Street, in which it has a 25 per cent stake, alongside funds group Heitman that owns 75 per cent on behalf of South Korea’s National Pension Service.They bought the site in 2011 for $35.6 million.
Property Bank Australia, Security Capital Corporation and RG Property are also taking advantage of the prevailing market with the sale of 116 Miller Street and 173 Pacific Highway, North Sydney, in May. The combined value is just over $100 million.
Bevan Kenny and Chris Veitch of CI Australia and Tyler Talbot, Angus Klem and Dominic Ong of Knight Frank have been appointed as the selling agents.
According to agents, Sydney’s north shore, from North Sydney to Hornsby, continues to go from strength to strength, as recent changes in town planning due to significant growth over the past decade see an increased level of high-density mixed-use developments, most notably in Hornsby.
The four-storey property at 108 George Street, Hornsby, is on 2265 square metres and is being sold through Matthew Dunn and Tim Grosmann of Savills and Tyler Talbot and Dominic Ong of Knight Frank, on behalf of a local private investor who developed the site in 2008.
The property is 100 per cent occupied with the retail leased to Officeworks and office leased to the NSW government, United Protestant Association of NSW and Australian Unity.
According to Matthew Dunn, director of capital transactions at Savills, the tenancy mix provides strength and diversity to the overall investment fundamentals and “we expect strong interest from local and offshore investors and developers, looking to make their mark on one of Sydney’s strongest markets”.
Tyler Talbot, head of sales, North Shore at Knight Frank, said “it is feasible to achieve a high-quality mixed-use development comprising a 12-storey mixed-use tower with about 100 marketable apartments and 2500 sq m commercial/retail space”.
Tim Grosmann, director of capital transactions at Savills said the future for this type of property will evolve “given that Sydney’s population continues to grow by 1.8 per cent per annum and that the planning guidelines in the immediate area are adapting to cater for this growth”.