CBRE Global Investors has paid around A$350m (€215m) to buy a North Sydney office tower currently being developed by Zurich Insurance Group.

The manager, on behalf of a German real estate Spezialfonds, has acquired the building at 118 Mount Street being developed to house the headquarters of Zurich Financial Services Australia.

Zurich will occupy more than 64% of the building on a 10-year lease.

The development of 25-storey commercial tower building commenced in May last year and is expected to be completed in late 2020

Chris Johnston, managing director-Australia and New Zealand, CBRE Global Investors, said the North Sydney market is undergoing a revitalisation with a significant infrastructure spend.

“We are excited about how this market is evolving and the opportunity for our client to be part of that revitalisation as the owner of a development of this size, quality and location.”

Reto Buehler, Zurich’s head of real estate of Australia, said: “Our mission is to achieve superior risk-adjusted returns relative to the Group’s liabilities.”

This property will provide Zurich’s Australian business with new purpose-built headquarters, and support the optimal diversification of the firm’s global real estate investment portfolio, Beuhler said.

Richard Butler, Cushman & Wakefield international director of capital markets, Australia & New Zealand, told IPE Real Assets that the building had attracted a “good” price because of location, panoramic views of Sydney Harbour and the strong covenant of its tenant.

His firm had carried out a full marketing programme, and the asset had attracted a wide field of potential buyers.

Butler said the North Sydney market continued to be a destination of choice for global capital, having attracted more than A$1bn in investment in the past 12 months from Singapore, the US, the UK, Hong Kong and Mainland China.

He expected rental growth in North Sydney to accelerate and spreads relative to the central business district market to contract.