Chinese developer set to buy Sydney office block as more Asian funds eye CBD properties

Larry SchlesingerJanuary 26, 2012

A Chinese developer is looking to acquire a nine-story Sydney office block as Asian funds continue to pour into prime CBD assets.

The unnamed developer is currently carrying out due diligence on for 333 Kent Street, owned by AMB Holdings.

The building, which measures nearly 9,000 square metres and is fully leased by Central Queensland University until 2017, last traded for $41.5 million in August 2010. 

In recent survey carried out by the US-based Association of Foreign Investors in Real Estate (AFIRE), Sydney ranked as the seventh most attractive city for offshore investors to buy commercial real estate.

The building is being marketed by Mark Wizel from CBRE, who has sold a number of development sites to Chinese groups, including 557 St Kilda Road in Melbourne, which was acquired by Setia Australia for $25 million. 

Over the past two years, Wizel has noticed a strong preference among Chinese buyers for development assets over passive investments, with the recent drop in the Australian dollar encouraging more offshore interest.

Wizel says Chinese developers have spent more than $180 million on development sites and plan to build about 3,500 apartments on these sites, the Australian Financial Review reported.

In addition, Chinese institutions are also seeking out more passive properties. Wizel expects them to start buying up office, retail and industrial assets and possibly apartment blocks in Sydney and Melbourne

Among these is Chinese conglomerate HNA Group, which has paid $117.7 million to acquire 1 York St from an unlisted fund run by Colonial First State Global Asset Management.

The purchase of the 22-storey B-grade office building is the first Australian investment for HNA Group, which plans to make further investments in Australia due to it have a stable economy, strong tenancy covenants and strong capital growth. 

DTZ acted on behalf of HNA while Colliers International represented Colonial.

For more on Asian investors in Australian property, download our free eBook Foreign Investment in Australian Property Markets

 

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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