Value of Commercial Property Sold May Not Surpass 2006 Record

While the fourth quarter of the year is typically one of the busiest for commercial property sales, 2007 is unlikely to match the record $4.156 billion record transacted in Melbourne last year, industry analysts say.

For the nine months of the year to date, the value of commercial property sales of more than $5 million is $2.67 billion, according to Knight Frank Research. This compares to $3.285 billion recorded for the first nine months of 2006.

Sales are down in each of the major commercial property sectors – offices, retail and industrial.

According to Knight Frank Research, the value of city and suburban office buildings sold in the first three quarters of this year was $955.33 million, down from $1.103 billion recorded for the same period last year.

Major deals include 222 Exhibition Street in the city which sold for $162.5 million, and a half share in the Freshwater Place 2 office building in Southbank, which sold for $130 million.

In the industrial sector, the value of properties sold for the first three quarters of the year hit $713.93 million, lower than the $1.073 billion recorded for the same time last year, Knight Frank says.

“Developers have been the biggest buyers of industrial this year, buying more than half (54 per cent) of the total value of industrial property transacted,” said Knight Frank industrial sales director James Templeton.

He said this compares to last year, when developers purchased 42.97 per cent of industrial property that came on the market.

Sales of Retail property for the first three quarters of 2007 is also down on last year, despite there being 56 per cent more properties sold than in 2006. According to Knight Frank, the value of retail sales this year is $998.65 million, compared to $1.111 million recorded for the same time last year.

“We’ve seen a reluctance of owners to divest but given the positive economic conditions forecast over the next few years and the weight of money from Wholesale Funds, some property owners are being enticed to rethink their strategy.”

“Institutions motivation and capacity to purchase has encouraged private investors who hold property to capitalise on the strong demand,” he said.

Mr Burns says there is almost $1 billion of Melbourne commercial property on offer between now and Christmas.

Major offerings include a number of CBD and St Kilda Road assets owned by Investa, the Foundry retail complex on Bourke Street, the Channel Nine site in Richmond, the Central West shopping centre in Braybrook and a Foster’s office and industrial portfolio in Abbotsford.

 

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco

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