Real estate fund manager EG has cashed in on surging demand for Melbourne CBD office space, selling their William Street tower for a hefty $93.88 million after purchasing it only three years earlier for almost half the price.
EG secured the 12-storey Melbourne CBD located building in late 2015 for $45.9 million.
The funds manager hoped the B-grade tower would sell for at least $80 million when it listed the William Street office tower in April this year.
EG’s divisional director Daniel Farley said the building was divested in-line with EG’s core plus strategy.
“We’re still big believers in the Melbourne office market which boasts strong white-collar employment growth and superior supply demand forecasts over the foreseeable future.”
Hong Kong investor KHI Holdings scooped up the 277 William Street site, with proximity to Flagstaff Train Station and Queen Victoria Markets, in a deal brokered by CBRE and JLL.
Vacancy rates in Melbourne’s CBD office market may drop below four per cent, according to Cushman & Wakefield’s latest office market report.
Although the prediction may be short-lived with 93,000sq m of supply expected to come online by the end of this year.
CBRE agent Kiran Pillai attributes Melbourne’s positive office market fundamentals as underpinning strong interest from local and offshore investors, particularly from markets such as Singapore and Hong Kong.
“A distinct shortage of deal flow over the course of 2018 has meant that when quality assets are brought to market, competition is strong and pricing is well ahead of the curve,” Pillai said.
EG completed cosmetic upgrades to the ground floor lobby along with infrastructure upgrades throughout the 12,080sq m building.
The WALE of the property increased from 3.3 years to 3.9 years.
“The property has seen a complete turnaround during our hold period and is now a quality B grade asset boasting a strong leasing success rate and excellent environmental credentials,” Farley said.