Melbourne, 11 January 2016 – Chinese developers have swooped on three Melbourne sites earmarked for more than 800 residential apartments in St Kilda, Oakleigh and South Melbourne, in deals totalling $56 million.
CBRE State Director Mark Wizel said the deals were a clear sign of the continued appetite for residential development opportunities across Melbourne, despite oversupply concerns.
"Nobody has their heads in the sand," Mr Wizel explained.
"We are all aware of the facts surrounding supply of apartments in Melbourne and there is no denying that supply is at high levels when compared with averages of the past decade, but the world in 2016 is very different to that in 2006 and this must be considered.”
With more first home buyers, migrants and, more recently empty nesters, opting to live in apartments, Melbourne is becoming increasingly similar to Sydney, with more inner city apartments not only within the CBD itself but in surrounding suburbs, Mr Wizel added.
CBRE's Lewis Tong said confidence in the Melbourne apartment was expected to increase in 2016.
"Many of our offshore buyers can't believe how expensive housing within 10km of the CBD is. Apartment living is the norm in many cities worldwide, therefore, they see a clear imbalance of future demand versus supply and also the clear affordability issues relating to traditional housing in Melbourne,” Mr Tong said.
The three deals saw three new entrants to the Melbourne market, with Carrington Real Estate Group from China acquiring the 41-49 Bank Street for $15,070,000. The site has a permit for 180 apartments.
Carrington was attracted to the location of the property, which is surrounded by several premium residential developments, including St James Apartments and the Royal Domain Complex, both on St Kilda Road.
"It is clear to see that Carrington was spurred on by the attraction of the approved plans offered with the site. Interestingly, the vendor bought the property from CBRE in 2012 for $10,000,000 and did very little to the property during that time," selling agent Julian White said.
Located at 54-60 St Kilda Road, the once head office of prominent Melbourne Development company MAB transacted to Chinese developer Spacious Group for $13,700,000. The property is earmarked for a luxury apartment complex benefitting from frontages to four streets.
The price eclipsed previous records for land in St Kilda, with the buyer gaining confidence from the success of multiple projects by Pace Development Group in the area, as well as STK by Caydon directly across the road.
"It's never an easy process for owners of property that have been owned for a long time to list their assets for sale, however, some of the prices being achieved for assets with characteristics like 54-60 St Kilda Road are just too good to not consider and something we are seeing more with our client base" CBRE’s Josh Rutman said.
In the third deal, A Chinese developer from China's Shandong Provence has purchased a consolidated block of land in Oakleigh. The site, which totals over 6,000sqm, was acquired for just in excess of $28,000,000 in a transaction brokered by CBRE's Victorian Development Sites team.
"Who would have thought five years ago that the Melbourne market would be mature enough to see a transaction of this size in the suburb of Oakleigh?" Mr Wizel explained.
"Times are changing and all suburbs that are close to retail, lifestyle and transport amenity will continue to benefit from the strong level of confidence from developers, both those based locally and abroad.”
"Developers are looking for different products than what they were a year ago, with properties that have improvements and up to five years of income being looked upon a lot more favourably than in previous years," Mr Wizel added.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.