Savills Investment Management (Savills IM), the international real estate investment manager, has agreed to acquire HQ South, an A-grade office building in Fortitude Valley, Brisbane from M&G, for its flagship pooled pan-Asian strategy fund.

The asset comprises a modern 14,588 sqm building in the thriving near-city Fortitude Valley precinct, with 1,503sqm in food and beverage tenants, a supermarket, GP clinic and other medical tenants to complement the upper level office component of 13,085sqm. This acquisition brings the total committed gross assets of the Savills IM pan-Asian strategy to approximately €400m, with 19 properties across Australia and Japan.

HQ South has a strong income profile, with anchor tenant CPB Contractors and 60% of income secured for 3 years. As an area popular with engineering and construction firms, it is set to benefit from the large amount of infrastructure investment planned and underway, including the Olympic Games in 2032. As a result of this and wider COVID-related trends, the southeast Queensland region is currently experiencing net positive migration boosting economic activity and the requirement for office accommodation.

The property has a 6-star Green Star design rating from the Green Building Council of Australia and NABERS energy and water ratings of 4.5 stars.

Greg Lapham, Head of Australia, Savills IM, comments: “We are pleased that we could add further diversification to our pan-Asian strategy. We are targeting to deliver resilient income and the potential for future growth through active asset management. HQ South has a strong income profile with the opportunity for us to benefit from growing demand in a potentially supply constrained sub-market, on the back of a significant increase in costs to develop”.

This purchase follows recent Japanese acquisitions, including a portfolio of 576 rentable units across Greater Tokyo and central Fukuoka and an office building in Yokohama, as well as Forest Lakes, a local neighbourhood shopping centre in Perth, Australia.

Focused on core-plus investments, Savills IM’s pan-Asian strategy was launched in December 2020 and has total equity commitments of approximately €260 million. The strategy focuses on markets in Asia Pacific and their key gateway cities to benefit from their stability, resilience and liquidity.

Savills IM manages AUM of circa €2 billion in the Asia-Pacific region with local offices in Singapore, Tokyo, Bangkok (as part of a cooperation agreement with Savills Thailand), Kuala Lumpur (as part of a cooperation agreement with Savills Malaysia), Seoul (via the strategic relationship with Samsung Life) and Sydney.