Pellicano and Camlen Property Group round out 2018 with off-the-plan Ringwood sale
A Macau-based private investor has pre-purchased an office development in Ringwood for $28,300,000 in a sign of the continued strength in Melbourne’s suburban office market.
The 60-62 Maroondah Highway project is 100% pre-leased to the Victoria’s Department of Treasury and Finance on a 12-year term.
It is being delivered by a joint venture between renowned builder/developer Pellicano Group and investment manager Camlen Property Group, with completion anticipated in May 2020.
The off-the-plan sale was jointly negotiated by CBRE’s Kiran Pillai, Josh Rutman and Lewis Tong with Dawkins Occhiuto’s Andrew Dawkins and Walter Occhiuto.
The circa 850sqm site currently comprises two single-level retail buildings. Factoring in the office development proposal, the sale price reflects a fully leased initial yield of 5.30% and a building rate of over $8,500/sqm.
CBRE’s Josh Rutman said the result was a clear demonstration of the appetite for suburban office investments in Melbourne.
“Buyers are focusing on tenancy covenants and lease tenure and have demonstrated a willingness to push pricing to new heights to secure the right opportunities,” Mr Rutman said
“We expect to see similar take-out or fund through deals in 2019 as suburban tenants continue to pre-commit to new buildings ahead of existing lease expiries to provide their staff with customised office accommodation.”
The Ringwood campaign generated nine bids from domestic and international investors, with four groups contesting the second round – resulting in an unconditional sale agreement.
Lewis Tong, National Director of CBRE’s Asian Services Desk, said the bidding highlighted a continued shift in focus from Asian capital domiciled in Australia from residential development projects to commercial investment deals.
“Capital is recalibrating as the market changes and we expect the interest in office investment opportunities to continue well into 2019, particularly after Chinese New Year,” Mr Tong said.