A spate of strata office sales have been concluded in the Melbourne CBD in the past month on the back of increased competition and appetite from local businesses and investors for prime assets.
Chris Ling, Oliver Hay and Daniel Wolman, of Colliers International’s Melbourne City Sales team, have sold two whole floor strata offices in the Melbourne CBD’s newest strata office development, 568 Collins Street, on behalf of Stamoulis Property Group.
“With a premium Collins Street address, these high end offices achieved impressive rates per sqm,” Mr Ling said. “Both purchasers were owner-occupiers capitalising on the current low interest rate environment to secure themselves a CBD office to call their own.
“These purchasers are relocating from offices in Springvale and within the CBD and are taking advantage of lease expiries to acquire CBD property."
The 103sqm Level 3 suite was sold for $800,000 and Level 6 (44sqm) for $380,000. The sale prices represented strong capital values of $8,636/sqm for Level 6 and $7,767/sqm for Level 3.
Mr Ling said 2015 was dominated by vacant possession office sales, indicating strong demand from owner-occupiers compared to investors.
“More than 80% of strata offices sold last year were done so with vacant possession,” he said.
“Whilst there is an ongoing influx of Asian capital into the Melbourne CBD commercial sector, these sales demonstrate heightened competition and appetite from local businesses and investors for prime strata assets."
Mr Ling and colleague David Sia have also sold a 110sqm strata office at Suite 31, 150 Albert Road for $575,000 (a capital value of $5227/sqm).
“This sale was negotiated and concluded in just two weeks, prior to the close of the marketing campaign,” Mr Ling said. “This premium office has picturesque views over Albert Lake and the Melbourne CBD and includes a rare wrap-around terrace balcony.
“The sale further indicates the trend of businesses relocating to locations closer to, or within, the CBD in order to be more connected and accessible to clients and amenities for employees. In this case, the purchaser is relocating closer to the CBD from Sunshine."
Mr Sia said Colliers International was experiencing record prices for strata offices in the CBD and city fringe as a result of small businesses and start-up companies searching for prime offices in the CBD and city fringe locations such as South Melbourne for more affordable office accommodation.
“Purchasers and businesses are capitalising on record low interest rates which are enabling them to own property in the city, as it becomes more financially viable than leasing,” he said. “Whilst we are experiencing a significant influx of Asian money from Singapore, China and Malaysia, the domestic market has also been showing significant strength. This sale is a prime example, representing a rate per square metre of $5,227/sqm."
Mr Sia said local purchasers were competing heavily with offshore Asian purchasers despite the hype surrounding offshore investment.
“Despite some uncertainty surrounding volatility in Chinese markets, demand is still flowing in strongly,” he said. “The market is still very strong and we are seeing an influx of investors from Malaysia and Singapore, who previously weren’t able to compete with the Chinese.
“As a result, we are seeing, and will continue to see going forward, more competition between local and offshore buyers.”
150 Albert Road, Melbourne