The value of commercial property deals in Melbourne has increased by 55 per cent in Q1 of 2014 and doubled in the past 12 months.
Research conducted by Knight Frank indicates that property with a value of over $1.8 billion changed hands during this period, compared with $1.8 billion in the first quarter of 2013. The total value of transactions has doubled to $6 billion.
Unlisted funds and syndicates made up the majority of purchasers. They spent just under one-third of the total ($1.80 billion). Offshore buyers were next, representing 27 per cent of transactions ($1.61 billion).
James Templeton, Knight Frank’s managing director, said recently that all sectors except CBD “recorded major increases in sales turnover.” Office buildings along St. Kilda Road, in Southbank and in the suburbs are very attractive to investors who are unable to find suitable properties in the city. According to Knight Frank managing director of commercial sales Paul Henley, the non-CBD market had turned over $974 million in the past 12 months. By March 2013, it had put up $681 million in sales.
Offshore buyers have been the most active in the market, having spent $433 million (44 per cent) of the total, according to Mr. Henley. Transactions in the St. Kilda Road area reached record levels in the first three months of the year, with $231 in sales; last year sales were $100 million.
In the city, property is being tightly held. Only $32 million in deals have been completed this year, compared with $592 million at the same time last year.
The retail sector was extremely busy, posting its biggest first quarter on record. Retail sales grew to $641 billion from $335 million in 2013. GTP Wholesale Shopping Centre Fund’s acquisition of a 50 per cent stake in Northland Shopping Centre in Preston played a large part in the positive numbers. Retail transactions reached $2.1 billion, compared with $904 million in March of last year.
Industrial numbers also did very well, and nearly tripled in the past 12 months. The value was $800 million, well above the $300 million recorded in the previous year.
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