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CBD now looks attractive

PREMIUM and A-grade CBD buildings up for sale this year are predicted to attract much interest after being all but ignored for the past six months.

Twelve premium and A-grade buildings have hit the market in the past year and nine of them went begging, including Central Park which failed to attract its reserve price of $285 million.

But with the latest interest rate cut and low vacancy rates, industry sources believe astute investors will soon return.

“The market has not been in a healthier position for the past ten years,” said Andrew Caltabiano, Hawaiian Investments property analyst.

“It is the best it has ever been in terms of a low vacancy rate.

“There is a real strength to the market and people will make a big mistake if they think the market is too weak.”

According to Chesterton International valuations and professional services director David Burgess, the imbalance between the recently-reduced interest rates and property yields would present sound buying opportunities.

He said property yields would take several months to fall in line with the interest rates, leading to a period during which properties could be bought on a strong yield compared to the interest rate level.

The positive outlook is a relief for the CBD property sales sector, which last year suffered at the hands of interest rate rises and the introduction of the GST.

Jones Lang LaSalle head of sales, Peter Agastino said while there were reasons specific to each property which deterred potential buyers, other forces were at play.

“The last half of last year was very tough,” Mr Agastino said.

“The properties all hit the market at the same time, at a time when buyers were not in the market.

“And there is only a very limited buyer market in Perth … and the big investors have been very selective in what they will buy.”

Colliers Jardine research manager David Cresp agreed and suggested Perth CBD buildings was not at the top of investors’ lists.

“Perth really suffers from the tyranny of distance to the east coast,” Mr Cresp said.

“There is a lot of focus on Sydney and Melbourne at the moment, Sydney is going from strength to strength and Mel-bourne is growing rapidly.”

Despite the expectations for the sales market to perform strongly, many will still be eagerly waiting the outcome of the sale of the soon-to-be-listed GIO building at 66 St Georges Tce.

The sale of the A-grade building has been suggested as a test of the market and will give a good indication if the hopes of the property sales sector will eventuate.

Another property coming to the market is 100 St Georges Tce and there are whisperings the AXA Building at 111 St Georges Tce will also be listed soon.

Mr Agastino was confident these buildings along with others already listed, would attract interest.

“Climate to buy is very favourable now and buildings offered for sale will meet with strong demand,” he said.

“The first half of this year will be stronger with the GST issue now settled and the confidence in the market place growing.”

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