International property group JLL will be handling the sale and will include close to 10,000sqm of prime CBD land bounded by Victoria Square, Wakefield St, Gawler Place and Flinders St.
Across three major buildings, including the State Administration Centre building, it will comprise of more than 55,000sqm of office space which houses the offices of the Premier, Treasurer and other ministers.
Housing the offices of the Chief Information Officer and Arts SA, the Education Department headquarters on Fliners St and Wake field House will be a part of the sale.
The former Reserve Bank building, currently the privately-owned Torrens Building, will not be included.
Up to $250 million government property is the sell-off worth, having the precinct sale as part of it. It was labelled “fire sale” by the Opposition. Treasurer Tom Koutsantonis said that it can only be done if the price is right.
For more than $35 million, two connected SA Police buildings are under contract on the other side of Gawler Place. By next week, expressions of interest in two other government owned properties will come to a close.
Bids between $15 million and $20 million are expected for the 575-bay Union Street Car Park in the East End, and around $8million for the 4500sqm development site on Penny Place, adjacent to the Federal Court building, has been projected.
Industry sources say that the State Government will be forced to pay up to $15 million in annual rental payments under a sale and leaseback agreement for the State Administration Centre precinct.
This adds to the new twelve-year lease for the SA Police buildings which requires $2.8 million in annual rent.
If interest savings on debt reductions outweighed ongoing rental costs, that’s the only time the administration centre precinct should be sold, according to the Opposition Treasury spokesman Rob Lucas.
“Given recent high CBD vacancy rates, the Government should only proceed with the State Administration Centre precinct sale if there is a guaranteed net financial benefit to taxpayers,” Lucas said.
He mentioned that the State Government should assure the public that there will be a net financial benefit and that the Government will not proceed with the proposed sale if there isn’t.
He also stated that the Liberal Party will not support any fire sale of government assets that aim to temporarily plug a hole in the budget.
In the 2008-09 midyear budget review, Victoria Square headquarters was included in the Government’s first proposed plans to sell public buildings.
To cover a revenue collapse, it hoped was to raise $400 million.
Last financial year, Under Treasurer Brett Rowse, who fronted the Upper House’s Budget and Finance Committee in June, confirmed that the government had raised $49 million from property sales. This is headlined by the $30.2 million sale of the 13.5ha Netley Commercial Park.
He said that close to $107 million was raised by the State Government as part of its property sell-off in previous years.
He said that they will be making sure taxpayers get value for money, unlike the Liberals who sold the TAB for less than one year’s dividend.
He mentioned that they are not going to sell unless they know the price is right.
He also stated that those who have a strong appetite for investing in the types of property assets the government is currently selling are the long-term investors. Examples of these are superannuation funds and property trusts.
“The administration centre site had potential for major regeneration including office hotel and residential development,” said the state managing director of commercial property consultants CARE Phil Rundle.
He said that it is a key site for the city and that there is no doubt that down the track it’s got the potential to be another City Central in ten to fifteen years time.
He mentioned that these strategic sites are few and far between and particularly its location on Victoria Square which is really on the improve.
Rundle said he expects competition between on and offshore buyers and it’s really in the right price range to attract the major institutions and the larger offshore buyers.
The sale was welcomed by the Property Council SA executive director, Daniel Gannon.
He said that a great parcel of property to put out to the market is the State Administration Cetre precinct.
“What we have here is the State Government underpinning a parcel for long-term investment that will result in much needed regeneration.”
JLL did not give a comment.