Sydney office block sold at 16% discount due to rates and remote working impact.
Breaking News: Australian Real Estate Firm Sells Office Building in Sydney
By Lewis Jackson and Rishav Chatterjee
Sydney’s real estate market is buzzing with the news that Australian firm Dexus has sold an office building in downtown Sydney. The buyer managed to secure a 16% discount on the property’s 2022 valuation, taking advantage of higher interest rates and the rise of remote working that has impacted office space prices.
According to Reuters, Dexus, one of Australia’s largest landlords, recently signed a conditional deal to sell its Margaret Street building in Sydney’s central business district. This move comes as the property industry, especially office building owners, face challenges due to the shift towards remote work and e-commerce. These factors have led tenants to reconsider their office space needs, while higher interest rates have impacted building values and debt servicing costs.
The 18-story A-Grade office was sold for A$293.1 million ($188 million), representing a 16.3% discount from its December 2022 valuation. The buyer, Quintessential Equity, an Australian property developer and investor, announced the purchase on its website without providing further details. Dexus will retain a A$50 million stake in the trust that will hold the property, as stated in their official statement.
This is not the first time Dexus has made such a sale. In June, they sold another premium office building in Sydney’s central business district for A$393.1 million, at a discount of nearly 17% compared to an independent valuation made in December.
Dexus CEO Darren Steinberg emphasized that forced sales were not on the table, as the company has secured enough financing from banks and recent note issues to fund its pipeline. They will only sell assets to generate cash for higher-yielding projects.
($1 = 1.5613 Australian dollars)
(Reporting by Lewis Jackson in Sydney and Rishav Chatterjee in Bengaluru; Editing by Subhranshu Sahu, Rashmi Aich and Sam Holmes)
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