New Straits Times

Sydney’s rents world’s fastest growing, again

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SYDNEY: Australia’s infrastruc­ture boom has kept Sydney’s office rents the world’s fastest growing for a second year.

Prime office rents, here, surged 30 per cent in the 12 months ended September 30, according to Jones Lang LaSalle Inc. Commercial space in the city is being squeezed as buildings are torn down to make way for a A$12.5 billion (RM39.3 billion) metro line, while developers are cashing in on the housing boom by converting harboursid­e towers into luxury apartments.

“You can’t dump a planned infrastruc­ture spend on an economy and not expect things, particular­ly in the office sector, to be buoyant,” said Kevin George, executive general manager of office and industrial at Dexus, Australia’s largest office manager.

Tenants needing to find new space because buildings were being demolished or converted “was the icing on the cake”, he said.

The New South Wales state government is spending about A$80 billion over four years to build roads, hospitals and schools and revamp public transport as the city chokes from faster immigratio­n.

The population, here, has swollen to five million from four million in about 16 years, half the time it took to add the previous million, according to the Australian Bureau of Statistics.

About 400,000 sq m of office space had been removed from here and its outer suburbs as buildings were demolished for the Sydney Metro and other developmen­ts, said Anneke Thompson, director of Australia research at Colliers Internatio­nal.

In the city’s central business district, 17 towers are being knocked down to make way for two metro stations.

The net effect was that only 135,000 sq m of office space has been added in the past three years, said Thompson, with LendLease Group’s A$7.9 billion Barangaroo South accounting for most of that.

Meanwhile, China’s Dalian Wanda Group is turning Gold Fields House at Circular Quay into apartments and a hotel, while Coca-Cola Amatil Ltd’s former headquarte­rs near the Sydney Opera House is being converted into luxury residentia­l units.

“Tenants are basically being squeezed all over Sydney,” said Thompson.

Still, that’s not discouragi­ng companies as the rental costs, here, are more akin to Singapore than Hong Kong, the world’s most expensive office market. Bloomberg

 ?? BLOOMBERG PIC ?? Commercial space in Sydney is being squeezed as buildings are torn down to make way for a A$12.5 billion metro line, while developers are cashing in on the housing boom by converting harboursid­e towers into luxury apartments.
BLOOMBERG PIC Commercial space in Sydney is being squeezed as buildings are torn down to make way for a A$12.5 billion metro line, while developers are cashing in on the housing boom by converting harboursid­e towers into luxury apartments.

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