Commercial property in Sydney's CBD remains to be one of the most sought after assets with record performances year on year, new research reveals.
According to data from leading global real estate service provider, Savills, $5.8 billion of office transactions were recorded in the 12 months to June 2015, up 78% from $3.34 billion in the previous 12 months, and up on the five year average of $2.96 billion.
Savills research analyst, Houssam Yakzan noted that this could turn out to be Sydney's strongest year of office investment ever.
Despite this large number of transactions, Savills reports further large single assets and portfolios in the market which, if concluded in the second half of 2015, will see transactions triple that of pre-GFC numbers.
Institutions, which consist of funds, trusts and syndicates, were the most aggressive investors, purchasing $3.1 billion (or 54%) in Sydney's CBD closely followed by foreign investors taking home $2.4 billion.
Foreign investors have long been part of the commercial property scene but it is only in the last four years that there has been such a rapid surge in demand, in particular from our Asian neighbours, according to Yakzan.
“The influence of overseas investors in the market continues to have a profound effect in Sydney 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,” he 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.
Savills Research recorded that average yields for A Grade buildings in Sydney's CBD now average 6.50%, a 13 basis point firming over the last 12 months.