CBRE and Colliers International have negotiated the $103.5 million sale of an A-grade office tower in the heart of Adelaide’s CBD.

77 Grenfell Street comprises 15,888sqm of office space, 596sqm of ground floor retail, and onsite basement parking for 37 cars. The 20-level tower is 96% leased to the South Australian Government. 

The sale, between German property funds group Real I.S. and Melbourne-based Wingate/IPG, was negotiated by CBRE’s Ian Thomas, Alistair Laycock and Thomas Gnieser, together with Colliers International’s Paul van Reesema and Alistair Mackie.

Investor interest in Adelaide strengthening

CBRE’s Ian Thomas said, “It became evident during the sale process that the buyer profile for Adelaide assets has expanded since 2017, with an increase in interest from the eastern seaboard – particularly Melbourne. As yields continue to be driven lower in other capital cities, more groups are looking to Adelaide for a greater return with less volatility,” Mr Thomas said.

“With the removal of stamp duty for the sale of commercial property on July 1 this year, buyers have actively looked to move into the market to take advantage of the transaction cost savings. The abolishment of the stamp duty was positively received due to its impact on the initial yield – and also the potential for South Australia to be a trading market without the significant impost of stamp duty payable in the other capital city markets.” 

Colliers International’s Paul van Reesema said Adelaide’s office market’s improving fundamentals were underpinning investor interest.

“Adelaide has hit an all-time high in 2018 in terms of both the number of major office sales and the aggregate value of transactions of investment, with 10 towers settling for more than $880 million and an additional three towers marketed for sale in the fourth quarter of the year,” Mr van Reesema said, adding investor demand was widespread, with buyers from Singapore, Sydney and Melbourne all purchasing during the year.

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