Japan’s Daibiru picks up Sydney office tower in $600m deal
Japanese property giant Daibiru Corporation has snapped up a Sydney office block for more than $600 million, as investors from that region show increasing interest in Australian real estate.
It is the largest office property deal to be finalised so far this year. The transaction was struck on an investment yield of about 6 per cent, a key benchmark for valuing city office towers.
Daibiru’s investment into 135 King Street is also a sign of rising confidence from institutional investors that the downturn in office property is nearing the bottom. When office values were at their peak three years ago, investment yields were in the low 4 per cent range.
The 29-storey King Street tower was held by fund manager Investa in its flagship office fund. The building is surrounded by high-end retail stores and global brands in Castlereagh Street and the Pitt Street Mall nearby, which has H&M’s flagship Sydney CBD store and Westfield Sydney.
“This unique environment has established the property as a top-tier corporate and retail destination,” Daibiru said.
“The property boasts excellent accessibility, located within a five-minute walk to major transportation hubs, including the Sydney Metro, light rail and train lines.”
Japanese flurry of investment
Major Japanese platforms are investing more in Australian real estate, commercial and residential. In one of the biggest commercial deals in Sydney last year, Mitsui Fudosan bought a 66 per cent stake in 55 Pitt Street for about $1.3 billion.
Another big player from Japan is Mitsubishi Estate, which has invested in luxury apartments with Lendlease, in land lease housing communities with Stockland and in Mirvac’s growing build-to-rent portfolio.
In December last year, Tokyo-listed Sumitomo Corporation made its first foray into the local market, with a joint venture with Mirvac on a Sydney housing estate.
Daibiru itself is stepping up its involvement, after first buying into Sydney’s office market in 2018 then expanding into Melbourne’s office market two years ago in a venture with Mirvac.
Meanwhile, Investa will take on the role of investment and property manager for the King Street office building for Daibiru.
“We are excited to welcome Daibiru to the Investa family and look forward to growing a long-term relationship with them here in Australia,” Investa’s chief investment officer Adam Crowe said.
Real estate agents Knight Frank and JLL brokered the sale of 135 King Street.
