Melbourne, 10 December 2014 – A Southbank development site adjacent to Melbourne's Crown Casino Complex has been sold for $22 million to a mainland Chinese developer seeking to undertake their first high rise apartment project in Australia.
CBRE negotiated the sale of the single fronted, 940sqm site, located at 88 Queensbridge Street.
The site presently includes two separate office buildings, however a permit was granted in late 2013 to construct a 55 level tower comprising 295 apartments. The sleek tower was designed by leading architects Rothe Lowman.
It is the second time in 12 months that the property has transacted. In 2013, Starryland Australia, a subsidiary of a listed Chinese developer, purchased the land for $18 million.
"The re-sale is a clear demonstration of the confidence that offshore developers have for permit approved sites in both the Melbourne CBD and immediate fringe markets,” said CBRE City Sales Director Mark Wizel.
Mr Wizel, who negotiated the sale with CBRE’s Josh Rutman and Ed Wright, added; “Despite widespread talk from industry experts about a perceived future oversupply of new Melbourne apartments, this view isn't being shared by offshore buyers , who are as agressive as ever in their hunt to acquire well located sites for high density, mixed use developments.”
The $22 million sale price sets a new benchmark for Southbank land at $23,400 per square metre - the highest rate per square metre ever achieved for a Southbank site.
Mr Wizel said this was a clear indication of the maturity in the Southbank market, with companies such as Central Equity having created a precinct which was recognised by overseas developers as profitable, safe and proven.
“A number of highly successful Central Equity projects and the recent success of Southbank developments such as the Prima Pearl diagonally opposite this site and Wrap Apartments on City Road have conveyed a strong message of confidence to offshore groups,” Mr Wizel said.
“Everything plays a role but without doubt the vision that Crown Casino and the Victorian Government had all those years ago is paying ongoing dividends when it comes to the attraction of international investment into the Southbank market.”
The sale comes amid signs of continued strength in the Melbourne apartment market, with strong presales recorded in a range of recent projects.
CBRE Director of Residential Projects, Andrew Leoncelli, said; “Unprecedented pre-sale rates highlight the strength in the Melbourne market and are one of the reasons why developers and apartment buyers, based both locally and internationally, are wanting to invest in Melbourne, which has been recognised as the world’s most liveable city.”
The sale of 88 Queensbridge Street follows the recent transactions of nearby sites at 51-65 Clarke Street, Southbank and 55-65 Dorcas Street, South Melbourne for a combined total of circa $65 million.
These sites were also sold to mainland Chinese groups making first forays into the Melbourne market.
Other recent sales include the Makers Mark building at 466 Collins Street, which was sold to Golden Age for $25 million, as well as the sale of the remaining two development opportunities at the former CUB site, which sold to China's AZX Group for close to $60m in October.
“It’s interesting to note the continued escalation in terms of land value in both the Melbourne CBD and immediate fringe,” Mr Wizel said.
“This time last year we sold Hanover House in Southbank for Pacific Group of Companies for $18,000/m2. At the time, the price was a clear standout when compared with other sales in the area,” Mr Wizel said.
“The 88 Queensbridge Street transaction has been finalised at a 25% higher rate, demonstrating that Melbourne values have come off a very low base in the eyes of international developers,” Mr Wizel said.
He also noted a positive turnaround in the attitude that Australian banks were adopting towards offshore apartment buyers.
“We have noticed a major change in approach to offshore apartment buyers and the percentage of these buyers that the banks are willing to support into new developments,” Mr Wizel said.
“This has previously been a handbrake for local developers to compete in the high density residential space due to restrictions on the level of foreign presales. The local industry has lobbied for a new approach to these restrictions and indicators are pointing to this working.”
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