Commercial property demand to remain strong in 2017

Commercial property demand to remain strong in 2017
Commercial property demand to remain strong in 2017

There is still strong support for Australian office markets with Sydney and Melbourne experiencing strong leasing and investment demands, says Australian Unity Office Fund fund manager Grant Nichols.

Nichols said Sydney and Melbourne's metropolitan markets are performing particularly well which has positive implications for AOF, as 56 per cent of their portfolio is weighted to those markets.

"More broadly, investment demand in Australia remains very strong and it appears that current pricing levels will be sustained for at least the short to medium term,” Nichols said.

"Canberra and Brisbane's vacancy rates look to have stabilised while tenant demand remains tepid in Adelaide."

Adelaide's market however remains comparatively attractive from a price point prospecting for both investment and accommodation. 

AOF has completed around 4,400 sqm of leasing since listing in June, with around 4,300 sqm subject to signed heads of agreement.

Combined, this equates to nearly nine per cent of the portfolio over the last five months.

“AOF is well positioned to deliver on its specified objectives, given the leasing completed to date, prevailing market conditions and its strong lease expiry profile.” Nichols said.

Peter Day, independent chairman of Australian Unity Investment Real Estate Limited, said their strategy is to maintain a portfolio diversified by geography, tenants and lease expiry profile through investment into existing property.

“The team has been actively seeking opportunities to help deliver sustainable and growing income returns for investors, by investing in quality Australian office assets in metropolitan and CBD markets."

Talking on the listing, Peter said they raised $152 million through an initial public offering of units and reduced gearing to approximately 30 percent.

The 2016 financial year delivered several highlights for AOF, including:

- Leasing approximately 30 percent of the portfolio

- Providing an average distribution yield of 8.6 percent for the year to 30 June 2016 based on AOF’s net asset value

- Achieving a $14.4 million valuation uplift compared to 30 June 2015

- Successfully refinancing the $140 million debt facility via three and five year tranches.

 

Tags: 
Sydney Property market

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