Chinese provincial player debuts in St Kilda Rd deal
A Chinese provincial developer has emerged as the buyer of a prominent St Kilda Road tower in a $163 million deal, a record for the leafy office and residential boulevard leading into the Melbourne CBD.
Title deeds reveal Runjiang Investment Group, a Shijiazhuang-based developer from Hebei province in China’s north, is now listed as the sole owner of 509 St Kilda Road through nomination from the initial buyer, private investor Michael Xie.
It is understood to be the first deal in the local market for Runjiang, which boasts an impressive portfolio of development projects in northern China since it was founded in 2012.
Mr Xie struck the initial transaction last November to acquire the nine-level office tower on a fully leased yield of 4.96 per cent.
On the sell side was property tycoon and former Rich Lister John Beville, who almost doubled his money in less than four years through his exit from 509 St Kilda Road.
The deal was brokered by CBRE’s Lewis Tong, Josh Rutman, Mark Wizel and Kiran Pillai.
Mr Tong declined to comment on the specifics of the entity transfer and ownership at 509 St Kilda Road.
“Overseas Asian appetite for the office sector has continued well into 2019, and we are handling several mandates from Asian capital sources which are yet to be allocated,” he told a recent business forum.
The transaction at 509 St Kilda Road represents a rate of $8300 per square metre, setting a new benchmark for the precinct when there had been plenty of action already last year.
Since then, private equity firm KKR and its local partner Vantage Property Investments have made a quick but profitable return from their investment in a 10-storey office building tower at 420 St Kilda Road, selling to an offshore buyer for $92 million or more last month, representing a per-square-metre rate that will pip the deal at 509 St Kilda Road.
Nearby the dual-tower complex at 424 St Kilda Road is close to changing hands for more than $70 million to another Asian capital player based in mainland China.
The run of recent high-profile transactions along St Kilda Road includes Abacus partnering with Singapore’s Wing Tai to buy 464 St Kilda Road for $95.38 million in April last year and the purchase by Singapore’s Mapletree of 417 St Kilda Road from Newmark for $144.4 million a year before that.
Other international buyers have also been active in the precinct: Singapore’s Tong Eng Group bought a tower from Myer Family Investments for $77 million and Rockworth Capital Partners took over 390 St Kilda Road from Fort Street Real Estate Capital for $98 million.
