China now largest overseas investor in Australian commercial property

NOTW_2015-07-31In Australia’s largest property transaction ever, the Chinese Government’s state owned sovereign wealth fund, China Investment Corporation (CIC), has purchased a portfolio of nine office towers for $2.45 billion. As a result, China is now the largest overseas investor in Australian commercial property. The vendor, Investa Property Group, is one of Australia’s largest unlisted owners and managers of quality real estate and is a subsidiary of New York based Morgan Stanley Real Estate. Morgan Stanley Real Estate Investing is a leading global real estate investment platform which began life in 1935 and now has approximately $1,454 US billion of assets under management.

The purchaser, CIC, was established in Beijing in 2007 with approximately US$200 billion of assets under management. It is a wholly state-owned vehicle responsible for managing the Chinese government’s offshore investments.

The property portfolio includes nine buildings and is part of a larger $9 billion worth of assets owned and currently for sale by the Investa Property Group. The buildings are mainly located in the Sydney and Melbourne CBDs but also include other buildings in North Sydney and Brisbane.  The portfolio includes a 25 per cent share in 126 Phillip Street, Sydney – a 34-storey office tower comprising 31 levels of office space and ground retail space, 30 per cent share of 225 George Street, Sydney – a 44-storey premium grade office building, a 50 per cent share of 400 George Street, Sydney – a 29-level office building with a 3-level retail arcade and a half share in 120 Collins Street, Melbourne – a 53-level office building built in 1991.

The sale reportedly represented an initial yield of 5% and has a fully let income of $145 million. The sale is subject to Foreign Investment Review Board approval.

 

Meredith Baume
Commercial Research

About Commercial Research

CoreLogic RP Data Commercial Cityscope is a web-based service. Access is sold by geographic regions (Cityscope areas). There are 25 geographic regions across Australia (three in New Zealand), clustered around the cities of Sydney, Melbourne, Brisbane, Adelaide, Perth, Canberra and Newcastle. Darwin and Hobart CBD centres aren’t covered. Cityscope Areas in NSW and QLD also include lease expiry data for the most complete commercial coverage available. For more information call 1300 734 318.

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