The CBD’s strata office market has continued pushing through the uncertain times of a global pandemic with a strong first half of 2020 as investors sharpen their attention on bricks and mortar.
The past six months saw 12 Melbourne CBD strata offices in excess of $1 million change hands.
Despite being down 25 per cent from this time last year Colliers International’s Strata sales team, Chris Ling, Anthony Kirwan and George Davies remain positive that there will be a flurry of deals in the back half of this year.
“We’re really happy with how the strata office market has responded over the last few months as it goes to show the sheer appetite for quality Melbourne CBD strata offices, even during times of uncertainty,” Mr Ling said.
Of those 12 property transactions, which totalled $20 million in sales, approximately 60 per cent of those properties were purchased by owner occupiers, with the remaining 40 per cent being snapped up by investors.
Buying enquiries have come from a mix of both local and offshore investors, viewing Melbourne as an investment safe haven.
“Speaking with buyers in the market, it’s clear that those who typically would have invested in the equities market are now looking to prime commercial property for its robust nature and ability to weather volatile times,” Mr Davies said.
With more than 40 years of brand development, Colliers International is recognised as the world’s fastest growing real estate services and investment management company.
“We are fortunate to have had such strong presence in Melbourne’s CBD and City Fringe strata market over a long period of time, allowing us to work continuously with the most active buyers in the market,” Mr Kirwan said.
In 2019 there were 27 strata office transactions in excess of $1 million. Of those 27 transactions, the average capital value was $12,591 sqm and average yield was 4.59 per cent.
The significant uplift in capital value was due to strong demand from owner occupiers looking to capitalise on record low interest rates and severe lack of supply in the CBD.
The highest rate achieved was for Level 7, 2 Collins St which Colliers sold on a capital rate of $26,667 sqm.
“The purchaser failed to buy the property when it came to market decades ago and therefore when it came around this time, he certainly was not going to miss out,” Mr Kirwan said.
Colliers are now focussed on their current listings. In their stable is The Penthouse, 222 Kings Way, South Melbourne. A whole floor of approximately 356 sqm, with 360-degree panoramic views of the Melbourne CBD and Port Philip Bay.
“An asset of this calibre on the gateway to Melbourne’s CBD is nearly impossible to come by; the expansive floorplate, uninterrupted views and natural light along with its secure lease makes this one of the most exceptional investment opportunities to come to market this year,” Mr Ling said.
“Opportunities of this kind are rare and as such, we are anticipating an extremely positive outcome for the vendor.” •
For more information visit: colliers.com.au