Sydney office sales for the first six months of this year have increased 40 per cent from the first half of 2018, new research from CBRE has found.

The firm's Q2 Office MarketView report highlights that Sydney and Melbourne were the two most active markets in the country in the first half of 2019, with $4.4 billion changing hands in Sydney.

According to the report, a total of $8.5 billion in office property changed hands nationally during the six-month period – up 21 per cent on the previous corresponding period.

At a glance:

• CBRE's Q2 Office MarketView report has revealed that $4.4 billion has been pumped into Sydney's office market in the first half of 2019.
• A total of $8.5 billion in office property changed hands nationally during the six-month period – up 21 per cent on the previous corresponding period.
• Partially driving the strong result was Scentre Group’s $1.52 billion disposal of the 299-year leasehold office towers above Westfield Sydney to Blackstone.

CBRE’s head of Capital Markets research, Ben Martin-Henry said there had been a record start to the year, despite the tightly held nature of the major CBD markets.

“Owners have been willing to sell for the right price, despite the tightly held nature of the major CBD markets, and the difficulty in recycling capital," he said.

“This has resulted in further yield compression across all major markets to a national average of 5.2 per cent for prime stock.”

"The RBA’s announcement of two, 25bps rate cuts since the Federal election has meant investors can now capitalise on rates of sub 3 per cent, which was expected to drive further compression in property yields."

CBRE’s head of Capital Markets research, Ben Martin-Henry. Source: CBRE

Partially driving the strong result was Scentre Group’s $1.52 billion disposal of the 299-year leasehold office towers above Westfield Sydney to Blackstone.

CBRE Capital Markets Director Michael Andrews said the average price paid at ~$156 million was the highest on record, illustrating the premiums being paid by investors to secure available assets.

“However, while volumes have been high this half, the total number of sales and the current availability of stock to purchase is much lower than we have witnessed previously,” he said.

“Tighter yields are being driven by aggressive and available debt enhancing levered returns for investors. We see this as one of the catalysts to driving further yield compression.”

Click here to view the CBRE Q2 Office MarketView report.

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