Melbourne, 21 December 2015 – Listed Singaporean real estate group Hiap Hoe has finalised the sale of its trophy 206 Bourke Street asset in Melbourne in a deal valued at $116,280,000.
Super fund investor ISPT has secured the mixed used property on a passing yield of circa 5.5%.
CBRE’s Mark Wizel, Josh Rutman and Justin Dowers managed the transaction in tandem with Savills agents Clinton Baxter, Paul Craig and Ben Azar.
The deal has been finalised just two years after Hiap Hoe acquired the property from developer Les Smith and finance house Qualitas.
“Hiap Hoe has taken the opportunity to capitalise on the buoyant market conditions for Melbourne CBD retail assets,” Mr Wizel said.
“Yields for prime assets are continuing to tighten due to a number of factors, including the cheaper cost of debt funding and the overall shortage of investment grade assets being offered for sale in all of the major Australian capital cities.”
Hiap Hoe Limited was advised on the deal by law firm Maddocks. Maddocks Partner and head of the Development practice team Nick Holuigue said the sale of 206 Bourke Street was the latest in a string of recent significant CBD sales by Asian investors.
“We are acting for a large number of inbound investors from China, Singapore and Malaysia who are increasingly taking advantage of opportunities in the market to sell prized CBD assets with the green light to be developed rather than doing the developing themselves,” Mr Holuigue said.
“The sale by Hiap Hoe Limited of 206 Bourke Street and the sale by Singapore-based Aspial Corporation, the developer of Australia 108, of 383 King Street to Haileybury College are prime examples this year of this trend. Our experience in this field tells us that this approach by inbound investors will continue in 2016.”
The 206 Bourke Street property, formerly known as the former Village City Centre, was built in 1986 and converted to retail and office use in 2010. While the net lettable area is currently 11,969sqm, there is potential for a significant redevelopment of the asset subject to the relevant planning approvals.
At present, there is an approved permit in place for a rooftop cinema in addition to an Elenberg Fraser design scheme for a 142-room hotel.
Mr Wizel said the asset has originally been developed as an “east meets west” concept but in recent times the positioning had shifted to provide more of an Asian experience – as highlighted by a recent lease deal with internationally recognised yum cha restaurant Tim Ho Wan.
The property is also linked to some of Melbourne’s most prominent Chinese businessmen with former Melbourne Lord Mayor John So operating the high profile Dragon Boat Restaurant at 206 Bourke Street and young Chinese entrepreneur Richard Gu being the owner of the Xiang Club & Rainbow Karaoke complex.
In addition, the centre benefits from a long term commitment to a high performing JB Hi-Fi store.
“Buyers were attracted by the fact that the upper levels of the property have performed incredibly well, with not one tenant having vacated since the centre’s 2010 conversion,” Mr Wizel said.
“Rarely do you see the upper level of a retail property functioning better than the ground floor as has been the case with 206 Bourke Street.”
The property spans a city block through to Little Bourke Street and is positioned within 100 metres of Bourke Street Mall.
It provides a key linkage into Melbourne’s Chinatown, the busiest and most vibrant 24-hour district of Melbourne.
CBRE’s Mr Rutman said; “The exceptional nature of the location is reflected in the high calibre of tenants within the property, including JB Hi-Fi, Navitas, Telstra, several banks and some of Melbourne’s best restaurant and hospitality venue operators. The lease to Tim Ho Wan in a major tenancy on the ground level will add further vitality and prestige to the centre when the dim sum restaurant opens early next year.”
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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.
