Ascendas-Singbridge makes second office acquisition in Sydney
Transactions - AUGUST 22, 2017

Ascendas-Singbridge makes second office acquisition in Sydney

by Andrea Waitrovich

Singapore-based Ascendas-Singbridge has acquired Civic Tower, 66 Goulburn St., in Sydney for A$252 million ($199 million), marking its second office acquisition in Australia.

The office has 246,386 square feet spanning up 24 office levels, a ground-floor retail space and a 53-space basement garage.

With its latest acquisition, Ascendas-Singbridge has built up a pan-Asian office portfolio consisting of approximately 345,000 square feet of office assets and an additional 807,000 square feet under development across Sydney, Singapore, Seoul and Shanghai.

In 2016, Ascendas-Singbridge made its foray into the Sydney office market, acquiring the office located at 100 Arthur St., for A$315 million ($249 million). It was purchased from privately held Townwood.

Ascendas-Singbridge is jointly owned by Temasek Holdings and JTC Corp. through a 51/49 partnership.

The Sydney CBD continues to encounter a declining number of office transactions, with only 10 sales occurring during the first half of 2017, lower than the second half 2016 and the previous corresponding period, according to Colliers International.

These lower than normal sales volumes, however, have occurred in an environment of high demand, and, as a result, average yields compressed across all grades during the first half 2017. Colliers has recorded a reduction of 19 basis points in premium grade, 25 basis points for A grade and 20 basis points in B grade average reversionary yields. Despite yields already trending toward historical lows, the 20-year prime average spread of 177 basis points to the risk-free rate suggests there is still room for further compression, given that the current spread is 299 basis points.

The ongoing strength of the Sydney office market, underpinned by a forecast shortage of short-term supply, is likely to encourage domestic and offshore interest moving forward, stimulating more impending sales throughout the second half of the year.

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