An offshore Chinese investor has fought off several local and international groups to secure a Burwood East office building for $25.5 million in a record-making result for the Tally-Ho business park.
The buyer - a first time investor in Melbourne’s commercial property market - secured the 12 Lakeside Drive building after an international Expressions of Interest process managed by CBRE Melbourne Middle Markets agents Kiran Pillai, Scott Orchard, Josh Rutman, and Lewis Tong.
It represents the team’s eleventh transaction to a buyer based out of Asia in the space of eight weeks.
The single-tenanted, eastern suburbs building was purpose-built in 1996 for VicRoads, with the government agency having recently committed to a new three-year lease to mid-2021.
The property was offered for sale by Yulgilbar Custodians and Myer Family Investments in a move to capitalise on the heightened buyer confidence in Melbourne’s suburban office market.
The highly competitive sales process resulted in a record outcome for the prominent business park, representing a new benchmark building rate of $5,655 per square metre; more than 41% higher than the average of the last three transactions in the same business park. This was despite the property’s short WALE of just three years.
Mr Orchard said; “While the property has strong fundamentals, the risk of impending vacancy led to significant challenges, particularly in relation to financing the acquisition. However, investors are choosing to put additional equity into deals of this nature, given their confidence in the long-term prospects for the Melbourne office market.”
Mr Tong, head of the CBRE Asian Services Desk, noted that offshore investors had shown a significant appetite for office assets in 2018. While this had previously been limited, primarily to the Melbourne CBD and city fringe, Mr Tong noted that recent transactions such as 12 Lakeside Drive demonstrated a widening of interest to the city’s suburban markets.
“Over the past eight weeks we have seen a surge of Asian interest in commercial assets in Melbourne, with an emphasis on income-producing properties that have large underlying land components within 50 kilometres of the Melbourne CBD,” Mr Tong said.
“We expect this to continue as several new entrants have signalled an intent to buy for the next development cycle or to hold for the next generation of their own family.”
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