Australian CBD Property: A Mixed Bag

Brisbane Square, Queensland

The biggest investment listing of 2008 in Brisbane has been withdrawn from the market. Even so Brisbane, which has recorded $730 million in CBD sales is in marked contrast to Sydney. Sydney, according to Jones Lang LaSalle has only had a handful of commercial sales.

Westscheme has been privately marketing the two-year old Brisbane Square office tower but dropping yields and lack of investor interest has seen the agent’s admit defeat and withdraw the property.

Sydney’s only significant sale this year was Valad’s $136 million sale of 40% share of Goldfields House development.

Melbourne has done slightly better with Investa Property Group reporting sales around $332 million, reflecting four major commercial property sales.

In contrast Queensland has seen $800 million in sales in the September quarter alone. Investa’s Mr Cook is quoted as saying:

“there is still reasonable value in the Brisbane market and that the availablity sub-$100 million ticket price suited opportunistic high-net-worth private investors.

In two or three years’ time, as the market starts to turn around yields start to tighten again and rents go up a bit, those guys will take the opportunity to trade out and will do very well”

DTZ national research manager predicts that the fall of the Australian dollar may prompt more investment activity from offshore buyers in the coming months.

Though the question is really going to be - when? Most high rich individuals in Australia are heavily invested in the share market and some are therefore up to their necks in margin calls: something which is starting to show in high end residential real estate which is ending up on the market. Australia’s complicated superannuation and tax laws positively encourage those on high salaries to leverage their share investments and the fall-out from this could be long and nasty and will definitely reflect in high end residential property and commercial real estate for quite some time.