Sydney posts record year of office investment

Strong demand for commercial property in Sydney’s CBD continues, with the harbourside capital posting record year-on-year growth.

According to property group Savills, Sydney office transactions totalled $5.8 billion in the 12 months to June 2015 – up 78 per cent on the previous 12 months, and up on the capital’s five-year average of $2.96 billion.

Savills revealed that institutions that consist of funds, trusts and syndicates were the most aggressive investors, purchasing $3.1 billion (54 per cent) in Sydney’s CBD, followed by foreign investors at $2.4 billion.

“The influence of overseas investors in the market continues to have a profound effect in Sydney’s CBD, as evidenced by the growing level of transactions over the last four years, with foreign investors having now purchased in excess of $6 billion in that four-year period,” Savills research analyst Houssam Yakzan said.

“Australia has two key elements that offshore investors are looking for: a stable and safe environment, coupled with higher yields than they are able to achieve in their local markets.”

Furthermore, average yields for A-grade buildings in Sydney’s CBD now average 6.50 per cent – a 13-basis-point increase over the last 12 months, according to Savills.

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