Office valuations decline slows in ‘positive’ sign for Dexus

Australian real assets specialist manager, Dexus, has signalled that while its total portfolio valuation shows a further decline, there is a positive sign that the office sector is rebounding.

In a statement made to the Australian Securities Exchange (ASX), the investment manager said that the draft valuations had been completed by an external and independent provider on 29 of its office properties and 143 of its industrial properties, for a total of 172 assets, in the six months to 31 December 2024.

The provider determined that Dexus’ office portfolio had declined by 3.2 per cent in value due to higher capitalisation and discount rates, despite growth in the rental market acting as an offset.

The firm’s industrial portfolio had grown by 1.4 per cent, as rental growth successfully offset higher capitalisation and discount rates.

“As a long-term investor, we have confidence in the value of our high-quality portfolio through the cycle,” Ross Du Vernet, Dexus Group CEO and Managing Director, said.

“Positively, the rate of decline in office valuations has slowed in the six month period, with improving transaction volumes and an increase in interest from institutional buyers.”

The valuations also suggested that the weighted average capitalisation rate across Dexus’ total stabilised portfolio rose in the six-month period from 5.9 per cent to 6.02 per cent; similarly, the weighted average capitalisation rate across the stabilised office portfolio grew from 6.05 per cent to 6.17 per cent, and that of the stabilised industrial portfolio increased from 5.45 per cent to 5.54 per cent.