Gold Fields House sells for $425 million

An artist's impression of the landmark Gold Fields House at Circular Quay, Sydney.

An office block will be turned into apartments with arguably the best views of Sydney Harbour after it was snapped up by China's DalianWandaGroup for $425 million.

The sale of Gold Fields House, at 1 Alfred Street, Circular Quay, comes as more Chinese investors are tipped to enter the Australian market in the coming year. They are cashed up and very large insurance and pension funds that like this country's transparent regulations and ease of doing deals.

CBRE head of research Australia Stephen McNabb said investors are expected to remain risk averse and this will ensure that, in most cases, there will continue to be a wide spread between the yields that can be achieved for prime versus secondary assets until there are signs of stronger economic growth.

It is expected the Goldfields site will be redeveloped into upmarket apartments. The harbourside building, controlled by Blackstone and a group of pension funds, was sold by JLL andCBRE.

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Another 1960s-era building nearby, 275 George Street, is understood to be close to being bought by Charter Hall.More large-ticket sales are due to be completed in the last business week of 2014.

Neil Brookes,Knight Frank's head of capital markets Asia Pacific, says investors are shifting their focus towards sustainable returns in the long term.

"The key factors for Chinese investors are the policy push from the Chinese government to diversify into other countries; a softening domestic market; and the pull from higher returns achievablein overseas markets.Australia, the US and the UK are the top three markets most Chinese investors are looking at.

"We saw five times as much capital outflow from China into these three markets in 2013 alone compared to the previous year. We expect the transaction volumes from Chinese investors into these three markets this year will match or even exceed that of last year.

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Gold Fields House sells for $425 million