Old money returning, syndicate snaps up fringe city office

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EXPERIENCED “old money” investors are returning to the Melbourne commercial property investment scene, looking beyond the short-term challenges created by COVID-19, according to Colliers’ top agents, who have handled in excess of $400 million worth of deals and have another $400 million in due diligence.

Colliers’ Daniel Wolman, Matt Stagg and Oliver Hay have sold 71–73 Palmerston Crescent, South Melbourne to a private syndicate.

The sale price is undisclosed and the agents declined to comment, but the property was listed in late 2019 with an expectation of around $15 million.

“The buyer for this is a local syndicate looking to capitalise on the short WALE and low rents and refurbish the building and take advantage of the value add potential, providing strong returns to their investors,” Wolman said.

The 71-73 Palmerston Crescent property comprises 4,528 sqm across five levels including 40 basement and ground level car parks as well a ground floor café.

Wolman said this deal was transacted from due diligence to unconditional during the COVID-19 pandemic.

“This demonstrates that for good assets in the right location, they will still trade,” he added.

This sale follows 412 St Kilda Rd sold by Colliers, 1 Bowen Crescent purchased by RANZOG, the Flight Centre building also on St Kilda Rd and 350 Queen St in the CBD.

“This pocket of South Melbourne and St Kilda Rd has attracted many buyers from syndicates, funds and owner occupiers who are seeing the benefit in being in such strong proximity to public transport (ANZAC Station and St Kilda Rd Trams) along with gateways in and out of the eastern suburbs with St Kilda Rd, Kings Way and Albert Rd,” he added.

Wolman said at the beginning of the outbreak there was uncertainty and buyers took a breather to assess the situation.

“But buyers are becoming aggressive right now, they are looking at the medium and long term, beyond the pandemic. Despite all that is happening, they are not forgetting that interest rates are extremely low, borrowing rates are 2.5-3.00%,”

He added that this is particularly the case with “old money” investors who have a track record with the banks.

“Its true we keep hearing that obtaining finance is difficult for some investors.

“But we are also seeing the re-emergence of old money, they are sophisticated and experienced investors who have been through previous cycles like the 90s and the global financial crisis.

“And they have a good track record with the banks so they can obtain finance,”

Wolman said pent up demand is also building as investors come out of hibernation.

“We have transacted in excess of $400 million worth of deals and have another $400 million in DD and our team is about to launch several new campaigns,” he concluded.

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