Chinese investors snap up Sydney office tower for $117 million

Asia-based buyers continue to invest in the Sydney CBD, with Chinese conglomerate HNA Group the latest to buy prime commercial real estate, following its purchase of 1 York Street for $117 million from Colonial First State.

The 22-storey building formed part of the CFS’s unlisted direct property investment fund and has a net lettable area of 18,400 square metres.

It was acquired by CFS from AMP Asset Management in June 2001 for about $78 million.

AMP Society acquired the building in 1994 as part of a $544 million purchase of UK-based Hammerson Plc's Australian commercial real estate portfolio.

The sale price reflected an initial yield of 8.5% with the deal negotiated by Vince Kernahan, Jon Chomley and Andrew Reed of Colliers International with Aurelio di Napoli from DTZ Sydney advising HNA together with Linda Zhu of DTZ’s Sydney-based China desk.

It follows CFS’s listed Commonwealth Property Office selling 259 George Street in July to the Singapore-based Tay family for $395 million.

Also in July, Singapore's K-REIT fund bought a half share of Mirvac's 8 Chifley Square for about $169 million.

Further purchases are likely from HNA with the group planning to spend around $190 million on real estate purchases in Australia. The company has more than $10 billion in assets under management.

Richard Li, a global investment manager with HNA Group, was reported in The Age as saying the strength of the economy made Australia an attractive place to invest, and ''given the excellent market conditions, HNA is expected to purchase further assets in the future''.

The HNA Group is the parent company of Shanghai-based Hainan Airlines.

The York Street building was constructed in 1973 and is a B-grade office building comprising 22 levels of office accommodation, ground floor lobby and parking for 125 vehicles.