M&G Real Estate has expanded its portfolio in Australia with the acquisition of a 25% stake in a 25-storey office property in North Sydney for A$109.5m (€69.4m).
The £31.70bn (€35.25bn) property manager has bought the stake in the 40 Mount Street asset, known as Coca Cola Place, by way of a joint venture with Investa Commercial Property Fund (ICPF).
M&G’s first co-investment with ICPF was the acquisition of 400 George Street in Sydney in 2006.
Richard van den Berg, the manager of the M&G Real Estate’s core Asia Property strategy, said demand for office space particularly in North Sydney’s central business district remains strong. But supply constraints are not expected to be relieved until 2020.
Van den Berg said Australia’s economy continues on a positive trajectory and demand for modern office assets continues to increase as vacancy rates in North Sydney are expected to tighten from 6.1% in mid-2018 to 5.7% by the end of 2018 due to positive leasing activity.
“Coca Cola Place is well positioned to benefit from this trend and will contribute significant value to our property strategies,” he said.
Van den Berg said: “We are delighted to further expand our real estate portfolio in Australia and to work with Investa again on our second office building acquisition in Sydney.
“We look forward to continuing to work with them and increasing our exposure in Australia.”