Melbourne’s metropolitan office market has been characterised by a shortage of investment grade assets and continued strong local and offshore demand in the first few months of the year.
“To date in 2016, we have seen four major metropolitan transactions over $10million with others currently in due diligence,” Peter Volakos, Colliers International Director of Valuations, said.
“This continues the momentum seen in 2015, which saw strong demand for investment property within the Melbourne metropolitan office market with sales volumes surpassing the previous 2014 record and falling just short of $1.1billion.
“This is the second year in a row that the Melbourne Metropolitan office market has exceeded $1 billion of total sales volume."
Steven Ellis, Colliers International Manager of Valuations, said continuing low interest rates, volatile equities markets and the weight of private and institutional capital looking for investment opportunities were the main drivers behind the strong sales results.
“Assets with long term secure leases and high underlying land values have been particularly sought after,” he said. “A continuing shortage of investment grade opportunities in the metropolitan market and strong local and offshore demand could see further yield compression this year but this will be dependent on broader investment conditions.”