National sales of prime real estate have topped $14 billion for the past six months, with office assets dominating and agents predicting an even busier second half, driven by capital inflows from overseas investors.
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These will include the pending sales of 52 Martin Place to REST Super Fund and 4 Bligh Street, Sydney, and the four David Jones department stores, if Woolworths of South Africa is successful in its takeover of the upmarket retailer.
There is also anticipation of assets being offered if Australand is taken over by Frasers Centrepoint as it reviews the portfolio and any sales of Leighton Properties and its interests in other groups by owner Hochtief. The volume of deals was 12 per cent higher than for the second half of calendar 2013, with NSW accounting for 43 per cent, Victoria, 34 per cent and the remainder spread across the other states, according to the latest data from LJ Hooker Commercial.
Mergers and acquisitions among the real estate investment trusts contributed to the availability of the properties, particularly from the takeover by Dexus Property and the Canada Pension Plan Investment Board of the Commonwealth Property Office Fund.
But individual sales have also come back into favour as REITS look to boost their portfolios with properties that offer either long-term tenants or development opportunities, such as conversion into residential.
The global low interest rate environment has made the higher yielding bricks and mortar sector attractive and Australia's transparent and stable property sector has seen large capital inflows from overseas.
LJ Hooker national research manager Mathew Tiller said investment from offshore buyers continued to be a major contributor to commercial sales transactions. More than $4 billion worth of assets were purchased by foreign capital during the first half of this year.
He said offshore private investors, institutions and developers made up 36 per cent of the value of transactions during the period, up from 30 per cent in the second half of 2013.
''The ongoing search for yield is set to see demand for Australian commercial assets remain strong over the second half of 2014,'' Mr Tiller said.
In the past few weeks, GDI Property has paid $136 million for Sydney's Civic Tower and Growthpoint Properties bought the NSW Police headquarters at Charles Street in Parramatta for $241.1 million.
Investa Office has also been active, buying 6 O'Connell Street in Sydney for $134.95 million, while Stockland bought the 12-hectare Brownes Dairy head office, processing and distribution centre in Balcatta, Perth for $53.5 million.
