Domestic and offshore investors continue competition for core office assets

Strong demand from both domestic and offshore investors for core office investment assets in Melbourne is set to continue in 2018.

“Over the past few years, Melbourne has witnessed the largest ever pool of buyers targeting assets coupled with the lowest cost of debt in history,” John Marasco, Colliers International Managing Director of Capital Markets, said.

“This significant net demand has, in turn, continued to compress market yields and total returns, which have now surpassed the lows of previous cycles.

“Melbourne’s strong investor appetite is underpinned by its strong leasing market, constrained supply and ongoing high demand from offshore capital.

“There is still room for further compression given the spread between the risk-free rate and prime yields are still above historical averages."

The strong forecast for investment in Melbourne in the year ahead comes on the back of a busy end to 2017, which saw Colliers International negotiate the sale of 77 Southbank Boulevard on behalf of CUB to the State Government of Victoria in December.

Colliers International has also been recently appointed to market VACC House, at 464 St Kilda Road. “464 St Kilda Road is one of only a handful of buildings of its size within the precinct,” Mr Marasco said.  

"This, coupled with the proeprty’s excellent future development potential, will see the asset generate significant interest amongst a wide range of buyer groups.”

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