With all sporting eyes on the London Olympics and the question of who will take gold, some of the cooler, less athletic heads are asking very different questions. Many of these concern who will ultimately benefit financially and whether or not the end result will justify the high costs borne by the British taxpayer.
Some key areas for attention include the cost of security, accommodation, traffic management and, of course, of the Olympic Park itself.
According to Centuria Property Funds, if the Sydney experience is anything to go by, Londoners can breathe easy.
Twelve years on, the Sydney Olympic Park picture is more than rosy, with a flurry of recent sales and leasing activity adding 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,” said Centuria Property Funds CEO, Jason Huljich. “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.”
As Mr Huljich pointed out, the area has delivered proven excellent long term performance for investors, with sustained solid returns supported by vacancy rates that are among the lowest in the country at 1.04% as at July 2012 compared with a national average of 9.1%.
Latest sales news includes the impending sale of, 5 Murray Rose Avenue, along with the offering of a 50% interest in one of the jewels in the Olympic Park crown, 2+4 Dawn Fraser Avenue. The former will be sold fully tenanted by Thales Australia on a 10 year term. The latter is fully leased to the Commonwealth Bank of Australia, a mainstay tenant of the precinct since 2006.
Centuria has been closely involved with commercial and, more recently, mixed use property in the Olympic Park precinct for close to ten years. Two Centuria properties in the precinct have been sold and are among some of the best performing in the Centuria portfolio, with average total returns of circa 20% per annum.
Given the current economic turmoil facing our London counterparts, what advice would Mr Huljich offer those seeking to replicate the Centuria success in post-Olympic London?
“Sydney Olympic Park has been such a success post the Olympics due to the following factors – fantastic transport infrastructure, convenience, affordability and exceptional planning whereby the Sydney Olympic Park Authority has continually looked to evolve the precinct,” said Mr Huljich.
Sydney Olympic Park: fast property facts
Twelve years since Sydney 2000, Centuria has purchased four properties in the Olympic Park precinct and, along with GPT, remains one of its most active owners. Property highlights include:
- Ongoing strong demand for office space resulting in one of the lowest vacancy rates in the country at just 1.04% as at July 2012 compared to a national average of 9.1%.
- High quality, long term tenants, including brands such as 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.
Centuria sales include: 2 Australia Avenue in 2009, with an average income return of 8.00% p.a. for nine years, plus a capital gain of 100%, equating to 19% average annual total returns; and 6 Herb Elliott Avenue in 2010, with an average income return of 8.4% p.a. for 7.5 years, plus a capital gain of 75%, equating to 21% average annual total returns.
Centuria purchased 100 Bennelong Parkway for $10.5 million in 2002. Based on a recent valuation it has almost doubled in value and it is delivering strong income returns to investors of 9.00% p.a. Centuria is currently working on a major residential scheme for 300 apartments, upon expiry of the long term lease, and expects this to generate significant capital profit.
More recently, in June 2011, Centuria bought 8 Australia Avenue for $30.15 million in a single asset fund at a yield of circa 8.85%.
1 August 2012