14 May 2013 — Investment in Melbourne’s CBD office market is defying the current trend of soft tenant activity, according to a new report from Knight Frank.

And Knight Frank Victorian Research director Richard Jenkins says sustainability specifications are “certainly becoming increasingly important to investor and tenant demand”.

“While it is difficult to measure the impact of ratings on tenant and investor decisions, they are a criteria included in the decision process,” he said.

Knight Frank reports, in the first quarter of the year, there was $777 million worth of transactions in the office sector, compared with $338 million for the same period last year, and $910.7 million for 2012.

Investor appetite has gathered momentum from late 2012, in particular for prime passive assets, which saw more than $1.35 billion in sales over the year to the end of March 2013, says the report.

Investment sales activity – above $10 million – in the 12 months to March 2013 within the Melbourne Central Business District totalled $1.35 billion across 18 properties.

Knight Frank says this year will see a record amount of transactions based on the first quarter.

Investment demand remained strongest from unlisted funds, superannuation funds and, increasingly, offshore groups, including sovereign wealth, pension funds, developers and private investors.

The full report is here.