Entire inner-city Melbourne block tipped to fetch $35m
A whole suburban block opposite the popular South Melbourne market has been tipped onto the market as one of the first major development opportunities in the city this year.
The 4630-square-metre super site bordered by Cecil, York, Northumberland and Market streets comprises a collection of 10 titles known as the “South Melbourne Portfolio”, all owned by a local investor.
Market expectations are about $35 million for the city-fringe site which currently houses a mix of industrial and retail buildings and offers 200 metres of frontage.
The offering comes following a surge of acquisitions by Asian developers in Melbourne with CBRE reporting that 75 per cent of development sales in the final five months of 2016 were to mainland Chinese groups.
The South Melbourne site is being marketed as a future residential development, hotel or commercial development by CBRE’s Mark Wizel, Julian White, Lewis Tong and Bianca Butterworth.”Due to a lack of scalable landholdings and appropriate zonings, quality development opportunities are rarely presented in the South Melbourne market precinct,” Mr Wizel said
Quality apartments
He said South Melbourne was popular with developers given the excellent amenity and high-quality existing residential housing, which created demand for quality owner-occupier apartments.
Recent South Melbourne site sales have all been at land rates of between $10,000 and $12,000 a square metre. The most recent sale was in May last year when a developer snapped up 9-17 Raglan Street, an 835-square-metre site with a four-level office building, for $9.1 million.
In November 2015 a Chinese developer paid $30 million for a South Melbourne car park and office building at 15-33 Bank Street on a yield of about 3.9 per cent.
Earlier this month, five-time Melbourne Cup winner and BRW Rich Lister Lloyd Williams sold the nearby Southbank premises of his property development outfit Hudson Conway for $11 million to a mainland Chinese company, which has plans for a new hotel.
According to CBRE, South Melbourne has been a hive for residential development activity in the past decade, establishing the suburb as one of the most successful development precincts in Australia.
However, much of this development has centred on the St Kilda Road precinct of South Melbourne, to the east of Kingsway and more recently attention has turned to Fishermans Bend.
“The scarcity of competing projects in the precinct and the quality of the location will help underpin buyer demand for the South Melbourne Portfolio,” Mr Wizel said.
