A building (center) owned by Morgan Stanley's Australian real estate unit Investa Property Group in Sydney. Morgan Stanley will sell Investa Property Group to China Investment Corp. [Photo/Agencies]

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

The $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 market."

The nine office towers in Sydney and Melbourne would make up the biggest of several offshore commercial real estate purchases by CIC in recent months. In June, French media reported that CIC bought 10 malls in France and Belgium from US real estate group CBRE for 1.3 billion euros ($1.44 billion).

Massive gyrations on the Shanghai and Shenzhen share markets have sent domestic Chinese stocks tumbling in recent weeks, culminating in their biggest one-day fall in eight years on Monday, underscoring CIC's need for a safe haven investment.

The Morgan Stanley purchase, which requires approval from Australia's Foreign Investment Review Board, indicates that China's interest in Australian real estate is broadening from the residential sector.

China invested A$27.65 billion ($20.17 billion) in Australia in 2013-14, overtaking the United States as the largest source of foreign investment, with almost half going into real estate, FIRB has said.

The deal bodes well for the Australian government as it counts on interest from China to support a wave of large privatization sales, including a A$17 billion government-owned electricity distribution network and ports serving some of the country's biggest cities.

Morgan Stanley will still seek to sell the commercial property management business which it also put up for sale with the office blocks earlier this year, a source with direct knowledge of the deal told Reuters.

That business has contracts to manage A$8.9 billion worth of buildings, including the buildings bought by CIC.

Tenants in the office blocks bought by CIC include government regulator the Australian Prudential Regulation Authority, telecommunications giant Telstra Corp Ltd and miner Rio Tinto.