Northern Sydney commercial property price surge no hindrance to Chinese investors

Commercial property in northern Sydney’s CBD is witnessing a price surge because of the introduction of the metro line, if recent deals are an indication. 

A refurbished Northpoint commercial property at 116 Miller Street and 173 Pacific Highway in North Sydney was recently scooped up by a Chinese investor for $135 million.

The property doubled in value in just six years. It last traded for $60 million in 2011, and was jointly bought by Property Bank Australia, Security Capital Corporation and RG Property, reported The Australian Financial Review.

The vendors have now capitalised on the rising value of the 11,368 sqm office and retail property located opposite the future Victoria Cross Metro Station, making a $75 million gain. 

The A-grade building has retail spaces and refurbished offices. Its tenant profile is strong, with Commonwealth Bank, ANZ, and National Australia Bank among them.

The building sits on a 2,304 sqm site and has a weighted average lease expiry of 3.4 years.

Property agents concur that the upcoming metro line, which will improve travel times, will push up prices and rents as stock is withdrawn and creates more competition in the market.

In the first half of 2016, 28,265 sqm were withdrawn in North Sydney with an additional 72,538 sqm mooted for withdrawal over the next five years. 

Meanwhile, yields have been compressed as have sizes of leases to sub-500 sqm. 

Gross rents rose by up to $80 a sqm in the first half of 2016 and vacancy is about 7 per cent.

Corelogic's Cityscope showed that sales in North Sydney increased in total value in the quarter to April 2017.

The deal for 116 Miller Street and 173 Pacific Highway was struck by Knight Frank's Tyler Talbot, Dominic Ong and Angus Klem and CI Australia's Bevan Kenny and Chris Veitch.