Investment in Melbourne’s metropolitan office market in 2017 surpassed $1billion for the fourth consecutive, with insitutions leading the charge.
Peter Bremner, Colliers International National Director of Investment Services, said 2017 had seen 39 transactions recorded in the Melbourne metropolitan office market above $5million.
“The total office investment volume decreased from $1.375billion in 2016 to $1.022billion in 2017,” Mr Bremner said. “Interestingly, the number of sales was the same, year to year, however the total sales volume was down by approximately $353million in 2017."
“The most dominant buyers in 2017 were institutions, who purchased $400million, or 39%, of all Melbourne metro office sales."
Private investors purchased $318.1million, or 31% of total sales, followed by developers ($102.8million or 10%) and syndicates ($93.7million or 9%).
Offshore buyers snapped up $90.9million worth of metropolitan office assets in Melbourne last year, or 9% of total sales. Owner occupiers purchased $16.4million, or 2% of total sales.
“This year, we expect more stock to come to the market as owners take advantage of strong conditions which we anticipate will continue throughout 2018,” Mr Bremner said.
“The City Fringe will continue to be a hotly contested market for all buyer types, driven largely by recent strong A-Grade net effective rental growth of 24%."
Average yield compression across the metropolitan office market was circa 50 basis points from the first half of 2017 to the second half of 2017.
The largest deal of 2017 was the sale of Ferntree Business Park for $195million, sold by Colliers International on behalf of Goodman on an initial yield of 6.30%.
Ferntree Business Park