$414m Galleria sale marks record year for property

DEMAND for Western Australian commercial property remained strong throughout 2003 and, despite the tightly held nature of this sector, the year was notable for a number of record-breaking deals,

Making news as the largest ever investment in WA commercial property was the $414 million sale of regional shopping centre, Westfield Galleria, to Centro Properties. 

The price tag on Westfield Galleria was the sector’s largest in more than seven years. The nearest comparable sale was recorded in 1996 when Coles Myer and Colonial Mutual Fund sold their jointly owned shopping centre, Galleria Morley, to Westfield Trust for $289 million.

Also in 2003, the half sale of Central Park to the Perron Group for $150 million set a new record for CBD property sales. The last CBD office building transaction above $100 million occurred in 1998 when the BT group reshuffled a half share of QV1 into BT Office Trust (now Principal Office Fund) with the purchase price of $130.6 million.

The sale of Elders Woolstore in Spearwood for $35.5 million to property investment consortium Aspen Group was the third big record breaker for 2003.

Previously the largest ever industrial sector transaction record was held by the sale of Russell industrial estate in Henderson to Melbourne-based Industry Superannuation Property Trust in an off-market deal worth $23.68 million in 2000.

While in the past the sector has been ignored by investment groups in favour of the retail and office sector, a shortage of quality office properties and strong market interest in the retail sector has led many small to medium end institutional investment groups to industrial property. 

As a result, Hawaiian Management and London-based Peak Property Holdings joined Aspen Group in securing the top three sales in industrial property.

Despite recording a decrease in the volume of transactions in comparison to 2002, the West Perth commercial sector continued to remain solid throughout 2003. In the face of clamouring investment interest for West Perth commercial property, existing property owners kept property sales in check. 

Spurred on by low interest rates and the diminished opportunities to reinvest in commercial property, few West Perth property owners chose to divest their property assets. The top two sales in West Perth for the year include $14.25 million sale of 1 Havelock Street and the $14 million sale of the Zurich building.

CB Richard Ellis property analyst Andrew Woodley-Page said that, during 2003 the Perth property market had experienced a huge demand for quality commercial property, however the market was tempered by the lack of available property.

“There is significant opportunities to be gained should you acquire a quality commercial property. It is prising one loose that is the problem,” he said.

Mr Woodely-Page said the shortage of available stock in the office and retail sector had sparked renewed interest in industrial property, which he forecast would continue into 2004.

Colliers International research manager David Cresp agreed that the industrial sector was poised to have more sales activity this year, led by smaller institutional buyers seeking to take advantage of the more tradeable nature of industrial property.

Mr Cresp said 2003 had been a significant year due to the three sales records broken throughout the year.

“The Westfield Galleria sale was the largest commercial investment property ever sold in Perth and Central Park was the largest valued office transaction ever,” he said.