Investors Flock to Offices as Interest Rate Drops
South Yarra-based developer Michael Yates has reaped more than $35 million from the sale of strata offices at his 9 Yarra development in Claremont Street.
Mr Yates said 53 of the 72 units sold to a mix of owner-occupiers and investors, many from Perth. The sales have all been in the past 10 weeks.
The 7200-square-metre project – once rumoured to be the new home of Village Roadshow – is due for completion by June.
On route to Africa for a safari holiday, Mr Yates said he was not surprised by demand for South Yarra office suites, citing record low vacancy rates, and continued demand by office users.
He said the low interest rate environment made a strong case to buy, rather than rent, offices.
"Interest rates could feasibly be 4 or 5 per cent next year," he said. "If an office suite returns a 6 or 7 per cent rental return, you could actually be in front, and I haven’t seen this situation for many years."
One developer hoping office tenant demand will spread west is Asian Pacific Building Corporation.
This week it offered rent discounts and other "carrots" to prospective tenants to fill strata office suites at its 1Queens Road project, opposite Albert Park Lake.
