Australia's DEXUS Property Group and DEXUS Wholesale Property Fund (DWPF) have announced the $434.8 million purchase of three buildings in Kings Square within the framework of a strategic commercial investment in the Perth CBD.
Kings Square is part of the 13.5-hectare Perth City Link project, which aims to see the Wellington Street Bus Station and the Fremantle rail line pushed underground to make way for new development in an area bounded by Mitchell Freeway, Roe Street, Wellington Street and the Horseshoe Bridge.
The regeneration project is being led by the State Government, public transport authorities and the Federal Government and aims at creating a new and improved public realm connecting the city centre with Northbridge area.
Under the plan, which will be essential to provide the necessary transport and infrastructure for an evolving city, Leighton Properties has entered into an agreement to sell three commercial buildings in Kings Square.
“Kings Square is an excellent fit with our vision of developing high quality, sustainable buildings in CBD areas and the high profile business interest demonstrates the outstanding calibre of this project,” said Leighton Properties director Mark Gray.
“Our participation in Kings Square reflects the Leighton Group’s broader strategy to leverage global trends towards urbanization and the large infrastructure, commercial and residential development requirements that stem from it.”
The transaction, which is expected to be the largest commercial property pre-sale in Western Australia, comprises towers KS1, KS2 and KS3 featuring 52,781 square metres of office and retail space.
Construction is set to start in the next months and the completion of the three towers is expected in 2015.
The first tower, KS1, will be on the corner of King and Wellington Streets and will be 19 floors high with 23,156 square metres of tenancy office space, while KS2 will feature 20,440 square metres of space on 11 levels.
Shell Australia and John Holland’s Western Australian headquarters have already signed on for tenancy in the second tower. KS3 will have 9,185 square metres of space over nine floors, including offices, shops and amenities.
Shell Australia director Ann Pickard said the company was attracted by the high quality of the project and its premium location.
“The fantastic facilities and other attributes of Kings Square will be an important part of our plans to meet the needs of our growing team as we develop our exciting portfolio of projects,” she said.
The value of the Perth CBD’s office market has increased and property leaders are considering it a key location for long-term investment as a result of the positive economic and population growth the region experienced in recent years and from its proximity to Asian markets.
“The Perth CBD office market has strong underlying fundamentals and limited committed supply which is expected to result in moderate mid-term vacancy, coinciding with the completion of Kings Square,” said DEXUS executive general manager Kevin George.
“There is a lack of quality, affordable stock in the Perth CBD with this product likely to be highly sought after. The attractive acquisition metrics of Kings Square, together with an income guarantee through to 2020, provides certainty against any near-term market softness.”