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June 23, 2017

Sydney’s office investment market has received a further boost as one of the country’s largest Real Estate Investment Trusts reveals a AU$1 billion commitment through the acquisition of two flagship assets in as many days.

Dexus Wholesale Property Fund, alongside Dexus, acquired a 50 percent interest in Sydney’s renowned CBD office and retail complex, the MLC Centre, for AU$722.5 million. The move immediately followed the purchase of 100 Harris Street, Pyrmont for AU$327.5 million.

In line with the group’s strategic objectives, these most recent investments enhance Dexus’s exposure to the Sydney market, increasing the Sydney weighting of the group’s office portfolio.

Sydney is the best performing office market in the world when it comes to forecast rental growth,” says Rob Sewell, JLL’s Head of Office Investments in Australia. “This growth has captured the interest of both domestic and offshore capital looking to benefit from the cyclical upswing.”

Sewell added that, nationally, Sydney’s market is in the midst of an unprecedented liquidity cycle, evidenced by high levels of transaction volumes and the number of bidders seen on major assets.

Over the past 10 years only four assets over AU$500 million have sold in the Sydney CBD, according to JLL, and the unique nature of the MLC Centre offering generated significant domestic and offshore investor interest.

“It is recognised internationally as one of the landmark office buildings in Australia,” says Sewell who, along with the firm’s Simon Rooney and Savills’ Ian Hetherington, negotiated the sale behalf of QIC.

A renowned asset in the Sydney CBD, the MLC acquisition will expand Dexus’s footprint in the core Martin Place precinct which is set to benefit from the highly anticipated Light Rail.

Meanwhile, the group’s acquisition of the heritage Pyrmont property – originally a wool store dating back to the 1890s – provides exposure to the thriving Pyrmont office precinct, which is fast becoming a hub for the growing technology and start-up sector. Co-working giant WeWork and property group Domain are the anchor tenants of 100 Harris Street; the sale of which was negotiated on behalf of Citi 100 by JLL and Karbon Property.

Sydney’s office market continued to go from strength to strength, following a solid 2016, where returns were significantly above historical benchmark, according to JLL’s Australian Office Investment Review and Outlook. While last year’s office volumes were curtailed by a lack of available product, 2016 still ranked as the third highest year of record for volumes, coming in at AU$14.46 billion.

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Rob Sewell

Head of Office Investments, Australia, JLL

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