Kara Capital Leads Japanese Group Into $454M Sydney Office Buy

Kara Capital has led a consortium of Japanese corporate investors to acquire a 50% stake in two prime Sydney CBD office buildings for $454 million, the firm said Tuesday.

The assets – 680 George Street and 50 Goulburn Street – sit within the World Square mixed-use precinct. They span 67,700 square meters of net lettable area across 45 levels and are 93.4% occupied. Anchor tenants include NSW Government departments and other national and multinational companies.

Kara Capital said the deal was struck at a 60% discount to estimated replacement cost, implying a capitalization rate of 7.5%. Managing Director Nazmi Camalxaman described the entry price as a key source of downside protection.

The Midtown precinct has benefited from new Sydney Metro and light rail connections, while limited future office supply in the area supports the investment case, the firm said.

The acquisition signals growing appetite among Japanese corporate investors for Australian office assets, particularly in Sydney and Brisbane, where valuations are seen as having stabilized near cyclical lows, according to Kara Capital.

Camalxaman said the biggest challenge for Japanese investors overseas is the information gap. "There are intermediaries who profit from that gap and there are those whose purpose is to close it," he said. "We believe investors make better decisions when they have better information."

Kara Capital positions itself as a deal sourcing partner that connects Japanese capital with Australian managers and selective opportunities. The firm did not disclose the names of the other consortium members or the seller.