Investors in Western Australia’s commercial property market appear to be feeling the effects of the global credit squeeze, as the first quarter of the calendar year passes without a single sale of prime stock in Perth’s CBD.
It’s a market far removed from this time last year, when one building had already sold and several others were under offer.
In the first three months of 2007, Singapore Airlines House at 178 St Georges Terrace had already sold for $12.8 million, while the Colonial Building was under contract to Select Property Fund for $47 million.
Contracts for the sale of both 255 and 267 St Georges Terrace were also finalised.
Currently, there are four prime CBD commercial properties listed for sale, including Wesfarmers House, Allendale Square, and two adjacent properties – Singapore Airlines House and the former Jardine House at 182 St Georges Terrace.
The latter is being advertised at a price of $36.5 million, rather than by expression of interest, which is unusual in the current market.
The building last sold in 1999, along with the adjacent Allianz House, for a combined $13.5 million.
Central Park is also due to come on line in the next month, while deals that are yet to be finalised include 251 Adelaide Terrace and a half share in the Bank West tower.
CB Richard Ellis manager institutional investment properties, Andrew Woodley-Page, said there was a great deal of uncertainty in the market.
“For every property that’s listed, there’s probably another three being touted off-market,” he told WA Business News.
“A lot of hesitancy is being caused by the credit squeeze, and listed property trusts are in a position where they’re not acquiring.” Mr Woodley-Page said the number and scale of last year’s deals were unlikely to be replicated in the current market.
“This is a different environment, although the property fundamentals remain strong.
The market is returning to a more traditional, sustainable level than the highly aggressive acquisitions of last year,” he said.
Colliers director investment sales Ian Mickle said that while the investment sales market had softened, he believed there would be a turnaround later in the year.
“Certainly, the market is quieter in terms of institutional buyers, and there is no doubt that buyer inquiries are fewer, but I think it’s a short-term phenomenon brought about by market turmoil,” Mr Mickle said.
