Capital Markets ANZ Oce Australia Market Environment Australian oce sale volumes have declined since last quarter with only $950 million transacting in Q1, 2017, falling from $4.2 billion in Q4, 2016. Oshore buyers have dominated this quarter comprising $462 million worth of acquisitions, a dierent story from Q4, 2016 where domestic purchases ($2.5 billion) were nearly double that of oshore ($1.4 billion). Sydney and Melbourne were the main contributors to the decline of national sales volumes as Sydney transacted $380 million compared to a previous $1.7 billion and similarly Melbourne transacted just over $100 million compared to $1.3 billion. Ongoing cap rate compression for major Australian oce towers in 2016 was the obvious combination of both limited core supply and ever-increasing demand. Improved leasing conditions in 2017 are a further ingredient for compression in 2017 as well-capitalised investors from all regions seek to increase deployment into Australian and New Zealand oce markets. Sydney CBD prime yields compressed 8 bps (5.63 per cent) and Melbourne 5bps (5.36 per cent), the lowest QoQ compression seen since Q1, 2016, however Australian oce assets continue to trade at yield spreads wider than long term historical averages, continuing to attract oshore investors. Read More 12 A Colliers International publication 00