Offshore Money ‘on Its Way Back’ as Abbotsford Asset Sells

A historic Abbotsford warehouse has been snapped up by a mainland Chinese buyer for $37.28 million on a 5 per cent yield, amid an increase of sales to offshore investors.

The 8000sq m warehouse on Grosvenor Street with frontage to the Yarra River, with a long-term lease to Australia Post, was listed in late August with price expectations of $35 million.

The deal follows a busy two months for CBRE Melbourne agents who have sold an additional 19 assets to Asian-backed investors for a total of $201.6 million in this period.

CBRE’s Mark Wizel, who managed the 45-50 Grosvenor Street sale, along with Josh Rutman, Julian White and Lewis Tong, said it had just been a matter of time before off shore purchases began to impact the market again.

“This is in no way a return to the record investment period we had seen prior to 2017, and let it be said we may not see that level of spending again for a long time, but it does signal that offshore money, and particularly Chinese money, is on its way back,’’ Wizel said.

Golden Week, one of the two annual week-long holidays for mainland Chinese, commenced at the beginning of this month, Juwai.com chief executive Carrie Law shares similar sentiment in that while it has typically been a traditional time for rapid-fire property buying in Australian cities, the period has cooled in recent years.

“The balloon has deflated over the past three Golden Weeks. It is less and less a time for massive Chinese binging on Australian property,” Law said.

“We still see some transactions, but it’s not the free-for-all of past years.”

Wizel attributes the fall in the Australian dollar, trade wars and stock market losses, along with more traditional factors including Australia’s safe investment status as attractive factors luring offshore buyers to Australia’s market.

The Grosvenor Street 9466 square metre site, which was previously home to Weston’s Biscuit Factory, is currently leased to Australia Post until 2028, along with software industrial firm Honeywell until 2021, on a net passing income of around $1.87 million a year.

The deal follows the recent sale of a 27 Market Street Box Hill property to a Hong Kong developer for $8.8 million, and a Beijing investor’s fly-in-fly-out purchase of a Hampton retail asset for $3.6 million, $200,000 over the reserve, on a 3.2 per cent yield.

Recent high profile sales also include the 19-hectare Woolworths distribution facility with long-term redevelopment potential snapped up by Harry Stamoulis for $91 million last year, Melbourne-based property manager Pomeroy Pacific purchased the neighbouring 4.1 hectare property for $30.5 million last month, while a local developer with China links purchased a 5.68 hectare HP site at 353-383 Burwood Highway for $88 million.