Lang Walker is sipping a gin and tonic watching the sunset on a beach in Fiji as he talks about what could be the largest single property sale in Australian history and the biggest deal of his long and profitable property development career.
The sand and surf Mr Walker is admiring is on Fiji's Yaukuve Island.
He is there for work – Walker Corporation is developing the Kokomo Resort – not leisure, but the G and T in hand is a fitting toast.
The billionaire Sydney property developer, who has a long track record of picking market peaks, will be cashing in on the most significant commercial property boom this century if he sells his premium $2.5 billion Collins Square project.
But Mr Walker doesn't think the market has reached its zenith.
"I think it's got a way to go. There is an influx of offshore money," he said.
Eventually Australia's top commercial assets will start attracting similar yields to London, New York, Singapore and Tokyo, he maintains. That said, property records have already tumbled this year amid the relentless hunt among large global investors for prime assets.
China Investment Corporation bought the Investa Property Trust portfolio for almost $2.5 billion in July, one of the biggest global deals of the year.
That deal set a new office price benchmark with its passing yield of 4.9 per cent for a portfolio of co-owned assets with a weighted average lease expiry of just under six years.
By contrast, Collins Square's high quality tenant list, an average of almost 12 years to run with the tenants and built-in annual 3.8 percent increases on leases is tipped to see a deal struck on an even lower yield.
"It's a matter of a global flow of money. We're hoping some of it comes our way," Mr Walker said.
It's not the first time the veteran developer has sold property in strong markets.
In 1994 Mr Walker floated a property business with Macquarie Bank that went on to generate billions in sales. Five years later he offloaded his share to Australand.
He sold another $1.5 billion portfolio in 2006 to Mirvac before the global financial crisis, but retained and added to some key assets.
This time around, Mr Walker admits the timing is good. "Yields are being driven by the weight of money. These are triple A prime assets. They don't come up often. I just felt it was a good time to put it to the market," he said.
Walker Corporation has appointed UBS AG to handle the sale of Collins Square's five towers and the refurbished historic Goods Shed which sits alongside Wurundjeri Way. They are targeting one buyer in a process expected to be finalised by June 2016.
UBS' head of real estate Tim Church said the assets would be highly sought after.
"The current spread of capitalisation rates to the 10 year government bond rate means there is significant capacity for further capital growth from securely leased assets," he said.
Yields were likely to compress further in Sydney and Melbourne in line with other global cities, Colliers International's Victorian head of research Anneke Thompson said.
London prime office yields are around 3.5 percent, Hong Kong's 2.8 percent and in New York they are 4.7 per cent, according to Colliers.
Walker Corporation has a $23 billion pipeline of projects. In August it fought off interest from Leighton Properties, Charter Hall and Dexus Property Group to snare the $2 billion commercial development rights in Stages five and six of Parramatta Square in Sydney.
The group will approach the Parramatta project with a similar mindset to Collins Square where it created a thriving retail precinct at the centre that helped attract top tenants like Marsh Mercer, Transurban, KPMG, CBA and AECOM.
Collins Square wasn't easy to get under way. Melbourne's Docklands, while home to many corporate head offices, is often criticised as barren by detractors.
"It was a big struggle when it was just an empty piece of dirt down there," Mr Walker said.
"I was trying to convince people of my vision for this whole precinct. People laughed. Now they are starting to say, 'That's what you were talking about'."
