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AU Office blocks still hot in Melbourne

Property Here - Wednesday, July 03, 2013

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INVESTMENT in commercial property is continuing to grow with sales jumping 24 per cent by value in the June quarter compared with the same period last year.

And activity has been particularly strong in the office sector, according to research published by agents CARE.

The research also shows that the level of activity by foreign buyers has fallen off sharply in the past year, while domestic buyers are continuing to open their wallets.

In the year to June, transactions by foreign buyers fell 43 per cent in value, while Australian buyers increased their spending by 30 per cent.

Year on year, there was a 12 per cent lift in the value of sales to $16 billion across Australia.

On a June quarter basis, sales grew to $5.2 billion from $4.2 billion in the same three-month period last year.

CBRE capital markets director Josh Cullen said there was a strong appetite for ``core stock'' from both domestic and international investors.

``We expect this increased appetite to continue through the remainder of 2013, although there is likely to be a shift toward non-core stock as core opportunities diminish,'' he said.

Offshore investors continued to view the Australian market as attractive from a relative yield perspective. This was demonstrated by Keppel REIT's purchase last week of a 50 per cent stake in

the $320 million Ernst &Young tower in Melbourne, CBRE said.

Savills reported this week that a Shanghai-based development company bought 640-652 Bourke St in the CBD for $22 million last week from Australia Post.

The agency said the sale was one of the largest per-square-metre transactions in recent times.

The existing building and 2700sq m site will be redeveloped, except for the facade.

Savills said a permit had been issued for a 42-level Hayball-designed apartment project comprising 563 apartments.

In another recent deal, The Age site on the corner of Spencer and Lonsdale streets was sold for $76 million to Far East Consortium of Hong Kong.

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