Singaporean real estate investment trust OUE REIT is preparing to acquire a 50 percent stake in Sydney’s Salesforce Tower, a transaction that values the landmark office building at approximately A$1.73 billion. The deal would see OUE REIT invest around A$864 million to purchase the interest currently held by Chinese firm Ping An Real Estate, effectively exiting the city’s tallest office tower.
The agreed capitalisation rate for the transaction is near 5.75 percent, a figure seen as reassuring to investors amid recent challenges posed by rising bond yields and an influx of lower-tier office stock weighing on market values. The move signals confidence in premium-grade assets despite a broader environment of cautious seller behavior and recalibrated pricing expectations.
OUE REIT’s prospective purchase follows an early bid from local office fund manager Investa, which sought a 50 percent share in the building. OUE REIT already owns a 19.9 percent stake, acquired through CBRE for A$357.2 million earlier this year, granting it pre-emptive rights over additional interests in the property.
Other stakeholders in the Salesforce Tower include Lendlease’s Australian Prime Property Fund Commercial and Japanese group MEC Global Partners Asia. Both face potential pressures; Lendlease anticipates sizable redemption requests next month while MEC Global is actively divesting hotel and office holdings.
Representatives from OUE REIT declined to comment on market speculation but reiterated their ongoing strategy to pursue acquisitions aligned with long-term value creation for unitholders. Agencies JLL and Colliers are advising Ping An on the sale process.
Located at 180 George Street, the Salesforce Tower is a centrepiece of Sydney Place at Circular Quay, an area that has attracted more than A$10 billion in private investment. The tower features 53 office floors spanning 59,196 square meters, a retail plaza, and three levels of basement parking. Key tenants include Salesforce, JLL, and The Executive Centre.
The transaction arrives as other major property owners continue to market high-quality office assets. Dexus and Canada’s Brookfield are among sellers offering prime office towers, including Dexus and CPP Investment Board’s upcoming listing of 60 Castlereagh Street, a 20-storey A-grade building in Sydney’s financial core, valued at about A$600 million. The building is anchored by BNP Paribas and represents a rare 100 percent ownership sale in the CBD in nearly two decades.
Meanwhile, Brookfield is seeking to sell a 50 percent interest in 52 Goulburn Street through Cushman & Wakefield and JLL, targeting proceeds close to A$180 million.
Market insiders suggest top-tier office buildings are more likely to attract tenant and investor interest, while secondary locations, such as Sydney’s North Shore, are experiencing price declines and slower buyer demand. Some stock perceived as overpriced remains on the market as geopolitical uncertainties and financing challenges temper syndication efforts.
Overall, the Sydney office market is exhibiting a split dynamic, with strong fundamentals favoring premium assets contrasted by softening conditions elsewhere. The Salesforce Tower transaction, if completed, will reinforce the value proposition of prime office space in the city’s core despite volatile wider conditions.