An eight storey office tower on Melbourne’s premier St Kilda Road boulevard has been snapped up by Hong Kong conglomerate Glorious Sun.
Glorious Sun is best known in Australia for buying local denim business Jeanswest and exporting the brand to mainland China.
The conglomerate, listed on the Hong Kong stock exchange, purchased 324 St Kilda Road for $42 million.
The building is fully leased to five tenants – Wesfarmers, Veolia Environmental Services, Silver Chef Group, Crawford & Company and SMART Group.
It was offloaded by West Australian fund managers Lester Group on a sub 6 per cent yield.
JLL’s Langton McHarg, Paul Kempton and Alex McColl handled the sale along with Colliers International’s Leigh Melbourne, Peter Bremner and Nick Rathgeber.
Low interest rates and falling vacancy levels across Australia’s office sector have spurred interest from large institutional investors.
Buying activity has been fuelled by strong net absorption of office space, attractive forecast rental growth and generous yields relative to other core markets in the Asia Pacific region.
Eight offices in St Kilda Road have been turned into apartments over the last past five years removing 71,693 square metres of office space from a total 672,950 sq m available on the boulevard.
Another four offices are likely to be converted over the next two years, removing another 41,680 sq m of space as upmarket apartment developments take advantage of the leafy street’s proximity to the city.
The Myer family is also seeking to offload a St Kilda Road office to tap strong investor interest.
The family’s private investment vehicle listed the seven level Gateway building at 312 St Kilda Road through agents CBRE with expectations around $65 million.