New property star on horizon

The Treasurer, Eric Roozendaal, In his speech on the mini-budget on Tuesday, said he was also reviewing the Government's property portfolio, including office buildings, surplus land and commercial real estate in precincts such as Australian Technology Park and Darling Harbour.

The Darling Walk sector of Darling Harbour, which includes the former Sega World, is being redeveloped by Lend Lease as a 64,000 sqm office park for the Commonwealth Bank. The Government is only selling the leasehold, albeit for 99 years, and property agents say the land is not expected to be that attractive for developers such as Lend Lease. One said that it would more likely be bought by a passive, private investor.

A spokesman for Lend Lease declined to comment.

Angus Cooke, of Chesterton International, said the Australian Technology Park was attractive - its feature was the $200 million development of 8 Central Avenue by Rebel Property Group and Seven Network.

He said there had been solid rental and capital growth in the fringe of the CBD as companies looked to save costs by moving out of the more expensive CBD.

The latest research by CB Richard Ellis showed that the suburban fringe market had its fourth consecutive six-month period of rising absorption in the half year to July, following the record level achieved in the six months to July 2006.

The report says that new construction is expected to moderate, after the current cycle reaches a peak this year and into next year. As far as yields are concerned, there is interest in high-quality buildings with solid lease profiles.

"There is now a great deal of activity in Australian Technology Park with Seven, Global Television and Pacific Magazines making the property sale more attractive to potential buyers", Mr Cooke said.

Australian Technology Park covers about 14 hectares, and more than 1000 people work on the site for a range of government and private sector companies.

The park has an established range of blue-chip tenants, including the Defence Department, the University of Sydney, Hewlett Packard and Johnson & Johnson.

The 8 Central Avenue development comprises 38,000 sqm, an 11-storey media and office complex with 12,000 square metres on the top four floors now being pre-leased through CB Richard Ellis and Chesterton International.