A new report highlights robust investment demand for office property throughout Australia during the third quarter.
According to CBRE's Q3 2013 Australia Office MarketView report, both domestic and overseas investors have demonstrated a strong appetite for office property around the country, pouring $3 billion into the the sector during the third quarter alone despite a tepid market for occupiers.
As is to be expected given its status as Australia's most populous city and leading financial centre, Sydney comprised a disproportionate share of the nationwide market for office assets, with the city's CBD and North Sydney seeing a combined sales volume of more than a billion.
The Sydney CBD saw a whopping $785 million in sales during the third quarter, bumped higher by a number of mega transactions including 200 George Street, 50 Margaret Street, and 50 per cent ownership in 1 Martin Place. Sales of office property in North Sydney alone beat out that in Brisbane and Melbourne, hitting roughly a quarter of a billion.
Australia's other leading cities logged far more modest sales levels, with Brisbane and Melbourne posting figures of $242.9 million and $231.4 million respectively for the three months to September.
Offshore capital has played a pivotal role in the strong demand for office property and ensuing high turnover, with prominent investors including Bright Ruby from China, Singapore's Hiap Hoe and Rockworth, as well as TIAA CREF and Hines from the US.
According to CBRE, despite the strong appetite among investors for office property in Australia's major cities, the leasing market still remains comparatively weak. An overall weakening in business investment has taken its toll on occupiers, compelling then to prop up margins via the adoption of cost-cutting measures such as lower recruitment targets and reductions in space requirements.
The report nonetheless expects demand to strengthen over the next several years on the back of overall economic improvement, particularly in the business services sector, with signs of growth already apparent in several parts of the country.