Key findings are:
• There were 35 transactions in H1 2020, totalling $1.24 billion in the Middle Markets space during the first six months of the year, which is a 53% decrease in transactions and a 44% drop in sales volumes over the same period in 2019 (Colliers International transacted 14 of the H1 2020 sales)
• Of the 35 transactions, 27 took place in the Metro Markets totalling $857.1 million, whilst eight assets transacted across Australia’s CBD at just $387.6 million.
• Despite a notable reduction in sales volumes across the market, both CBD and Metro assets saw an increase in the average purchase price, which was particularly evident in the Metro market where the average price of an asset increase by 36% - due to limited stock putting upward pressure on pricing. The average sale price for Metro assets in H1 2019 was $23,308,238, compared to $31,743,889 in the same period in 2020
• Globally, office transactions were down 38% in the first half of 2020 when compared to the same period in 2019 - the impact was felt most strongly in the Asia Pacific region where deal volumes were down 55% over the same period
• Transaction activity was impacted most strongly in Asia, given it was the first region (globally) to be hit by the COVID-19 pandemic – as countries went in to lockdown, transaction activity started to slow when compared to the Americas and EMEA
• Offshore sales were down from 14 to four (a 71% reduction) which can be attributed to the effects of COVID-19. It is worth noting that the five offshore purchasers all came from Asia, with the average sale price increasing from $48 million in the first half of 2019 to $71.6m in 2020.
Matthew Meynell, Head of Investment Services at Colliers International, commented “one constant in the first half of 2020 was the unprecedented level of enquiry, and capital still chasing Office assets. However, the flight to quality thematic is beginning to play out, as investors pursue strong covenanted assets, and forensically investigate tenant solvency and assets with long WALEs”.