China wealth fund plans to buy Australia office blocks

Sydney

SOVEREIGN fund China Investment Corp (CIC) plans to buy Australia's biggest office block portfolio from Morgan Stanley for US$1.82 billion, highlighting Beijing's appetite for stable assets offshore as the mainland economy sputters.

The US$200 billion CIC made its biggest Australian investment just as Sydney's commercial property market braces for a glut of new office space, despite little apparent appetite from tenants to expand their footprints in the country's main business hub.

"It's a gamble, particularly considering US rates might be going up for the first time this year and when they rise, we'll probably rise as well," said CLSA senior real estate analyst Michael Scott. "The big tenants aren't expanding that much, everyone's a bit cost-conscious," he said. "To be doing it at this sort of magnitude really is a sign of how the Chinese want to get set in this…