Sydney’s transaction volumes, though still historically low, reflect increasing confidence and comfort in the core CBD market. This optimism is supported by moderate improvements in leasing activity and the continued enhancement of key public transport infrastructure, with train, light rail, and Metro networks all now established.
As we reach the end of 2024, Sydney’s commercial office market shows signs of renewed momentum, building on increased transaction volumes compared to 2023. Investors are finding greater transparency and value in pricing expectations. While prime yields now sit around 6%, it remains to be seen if the market has bottomed out. However, it certainly displays enough value to see investment activity return with some level of confidence.
Premium and A-Grade assets in core locations have been of particular interest to institutional investors. Strong participation from overseas capital has increased as allocations towards Australia become more attractive.
Key Sydney CBD Transactions in 2024
April 2024: 255 George Street
Seller: Mirvac | Buyer: Keppel REIT ($363.8m for 50% stake)
This acquisition by Singapore’s Keppel REIT was a closely watched transaction, landing at a 17% discount on peak book value. Keppel justified its rationale to investors by pointing to support by the stronger net absorption of well-located CBD assets.
June 2024: 55 Pitt Street
Seller: Mirvac | Buyer: Mitsui Fudosan (66% interest in a $2bn office project)
Mitsui Fudonsan will co-own, develop and construct the asset, with a strong pre-commitment from Minter Ellison Lawyers, in a now transformed part of Sydney next to 200 George Street and Salesforce Tower.
June 2024: 5 Martin Place
Sellers: Dexus and Canada Pension Plan Investment Board | Buyer: Cbus ($310m for 50% stake)
Cbus acquired the remaining 50% of its half-stake in Sydney’s 5 Martin Place for $310 million, realising a 24% discount from its peak value.
September 2024: 388 George Street
Seller: Brookfield Asset Management | Buyer: UOL/Singapore Land ($460m for 50% stake)
After a significant redevelopment by Brookfield and Investa, upgrading the 38,000sqm tower and adding an additional 3,000sqm pavilion, Brookfield has exited the investment, with Investa taking over full management on behalf of UOL, Oxford Properties, and Link REIT.
October 2024
333 George Street
Seller: Charter Hall | Buyer: Deka Immobilien ($395m)
Another example of international capital seeing value in the highest quality is core CBD assets, with 333 holding a 5.5 Star NABERS rating and 6 Star Greenstar rating and central to every significant transport route.
November 2024: 10-20 Bond Street
Sellers: Mirvac / Morgan Stanley Real Estate | Buyer: BGO ($580m)
US investment giant BGO made its first Australian acquisition, with the 38,000sm Bond Street complex sitting at the centre of Sydney’s traditional northern core. This is a reflection of US institutional capital being attracted to well-located core assets.