As Olympic critics question whether the event is worth the costs borne by taxpayers, an analysis of the Sydney games claims that the Olympic effect is pure gold for investors. Should you now be looking at London as an investment option for your clients?
Centuria Property Funds, for one, has claimed that London sceptics may be on the wrong side of the fence, as it examines the benefits that Sydney has experienced following Olympic investment.
According to the group, the Sydney Olympic Park picture is rosy 12 years on from the iconic 2000 Olympic Games. Its CEO, Jason Huljich, claims that a flurry of recent sales and leasing activity has added to an already appealing investment story.
“Sydney Olympic Park has well and truly thrown off the ‘white elephant’ tag that some of the cynics gave it early in the piece,” he said. “As well as a track record of strong continuous demand from high quality tenants, the ongoing investment merit of the precinct is borne out by a renewed surge of sales interest in the precinct.”
He claims that sustained solid returns have been supported by office vacancy rates that are among the lowest in the country at 1.04% in July 2012 (compared to a national average of 9.1%).
So what are the key criteria that London will need to tick off in order to experience similar success? Huljich claims that there are a number of factors that have underlined the Sydney success story.
“Sydney Olympic Park has been such a success post the Olympics due to the following factors,” he said. “Fantastic transport infrastructure, convenience, affordability and exceptional planning whereby the Sydney Olympic Park Authority has continually looked to evolve the precinct.”
He added that other factors that have helped investors in Sydney Olympic Park include:
High-quality, long-term tenants: including CBA, Samsung, QBE, Fujitsu, Eveready, NSW Lotteries and National Foods.
High profile tenant CBA committed to approximately 57,000 square metres in 2006. One of its three buildings, owned by Colonial, sold in July 2008 for $104.5m to German fund manager Real I.S. at a yield of 7%.
Recently, a 50% interest in another of the CBA-leased buildings has been offered for sale, with a successful sale likely to set a new high water mark for the area.
Imminent sale of a new building at 5 Murray Rose Avenue understood to be at a 7.75% yield, leased to Thales for a 10 year term.
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