Fife Capital buys Sydney's Castlereagh Club
Sydney-based fund manager Fife Capital has bought a four-level strata property in the Sydney CBD known as the Castlereagh Club in a $19.85 million deal struck on a yield of 6.5 per cent.
While strata properties traditionally don’t attract the same level of interest as other commercial buildings, a low interest rate environment and lack of stock available in the CBD generated stronger than usual interest from local and offshore buyers.
The 2622sq m property is the podium at the bottom of the Victoria Tower residential complex at 197 Castlereagh that was developed by Financial Review Rich Lister Bob Ell’s Leda Holdings more than 20 years ago after it purchased the airspace above what was originally the Catholic Club.
The building has just been refurbished and World Gym has signed on to occupy 1600sq m. It comprises a ground floor bar with poker machines, a restaurant, 12 parking spaces, squash courts and a gymnasium.
The sale was brokered by Colliers International’s Tom O’Neill and Vince Kernahan in conjunction with Henderson and Horning’s William Mulvihill and Bill Rees.
“The campaign saw very strong interest from local and offshore high net worth investors and funds who recognise the exceptional growth prospects for the property being surrounded by new projects which are adding valuable amenity,” Mr O’Neill said.
“These include the proposed Sydney Metro stations and the towers that will sit above them – the Pitt Street North office tower and the Pitt St South build-to-rent tower,” he added.
Mr O’Neill said the low interest rate environment was creating increased competition among local high net worth buyers looking for long lease terms as well as Asian investors, particularly capital coming from Hong Kong, given the political instability there.
But while demand from investors in this segment of the market is growing, low interest rates are also acting as a deterrent to owners offloading assets.
“It’s very hard to get a foothold in the CBD market, so those owners who do have a presence here are somewhat reluctant to let go of their holdings here because they know how hard it is to find something again,” Mr O’Neill said.
Fife Capital is also in due diligence to buy Brisbane’s much-loved cultural institution, the Metro Arts building, in the city’s golden triangle, which is expected to sell for about $11 million.
