China has emerged as the largest overseas investor in Australian commercial property with in excess of $5 billion worth, following the deal to buy nine premium office towers by the sovereign wealth fund, Chinese Investment Corporation.
The portfolio was sold by Morgan Stanley Real Estate for an estimated $2.5 billion as part of its transaction to sell out of its interest in the Investa Property Trust platform.
It is the biggest ever single direct real estate sale in the Australian market and will skew the ownership of the sector towards more foreign owners, once all necessary approvals have been received.
Located largely in the Sydney CBD, the Investa flagship assets include interests in 126 Phillip Street, 225 George Street and 400 George Street, Sydney; and 120 Collins Street in Melbourne.
The remaining part of the Investa sale is the broader management of the group, which includes the Investa Office Fund and the unlisted commercial property fund. Interested parties include Mirvac, among others, or the current Investa management, through an internalisation.
Once the deal is completed CIC will be the third biggest office landlord in Australia, behind DEXUS and GPT Group. Its entry is the first of the large Chinese wealth funds and is expected to trigger more deals from other parts of that country.
Colliers International's national director of research, Nerida Conisbee, said not only is ownership becoming more concentrated among institutional and overseas groups, CBD office assets are also becoming increasingly concentrated among fewer owners.