Melbourne finds itself in the midst of a development site buy-up unlike any the city has has experienced in the past. Last week, news came to light about Singaporean developer, Hiap Hoe, purchasing not one but two strategic properties in Melbourne’s CBD which adds to their recent purchase of MAB’s development site located at 6-22 Pearl River Road in NewQuay only two months ago.
Last week initial announcement specified that Hiap Hoe purchased 380 Lonsdale Street in Melbourne which currently operates as a commercial car park, office and retail complex. With a sale price of $43.8 million it's widely regarded as a premium 3,165 square metre CBD site which spans an entire city block near the corner of Lonsdale and Elizabeth Streets. The site has been recently issued with a planning permit for a 46 storey mixed use tower designed by the prominent architecture firm Spowers which will incorporate a combination of residential, commercial and retail components valued at approximately $480 million.
Following 380 Lonsdale Street's purchase, Executive Chairman and CEO of Hiap Hoe, Mr Teo Ho Beng was delighted with the company’s purchase. “The opportunity to acquire a substantial core Melbourne CBD development site with an approved permit represents a strategic acquisition for our group. We are delighted to not only have secured the site for future development but also to be able to acquire a holding such as this with an income that represents an income yield close to 6%, well suited to our future plans.” said Mr Teo Ho Beng.
Tracey Wun, the Executive Director of Hiap Hoe echoed the CEO’s sentiments and commented on the future development of the site. “Active development for the 380 Lonsdale Street is a further 12 – 24 months away and will incorporate 627 apartments, 740 commercial and residential car parks with dynamic ground level retail to activate the street to encourage pedestrian thoroughfare into the building.”
Testament to Hiap Hoe’s ambitious and enthusiastic approach to their Australian expansion plan, a second announcement was made the very next day outlining Hiap Hoe's purchase of the established retail and commercial complex at 206 Bourke Street. Located close to Melbourne’s ever expanding retail core, three CBD train stations and well connected with trams along Bourke Street and Swanston Street, 206 Bourke Street will continue to be a central hub for locals and visitors.
Speaking about their third acquisition, Mr Teo Ho Beng said “This acquisition of 206 Bourke Street has everything we were looking for in a long-term investment project in Melbourne – attractive yield in excess of 7%, high leasing rate at 98% in Melbourne’s Chinatown precinct, and the opportunity to expand with the interests of Melbourne to generate a high net return for all parties involved.
Hiap Hoe believed the time was right to ‘green light’ the acquisitions because of two major contributing factors. Firstly, the falling value of the Australian Dollar, which filliped the decision to take advantage of the better value by the movement in currency. Secondly, and notably, the enormous injection of capital occurring in the immediate vicinity of 380 Lonsdale Street spearheaded by the $1.3 billion re-development of the former Melbourne Myer Department store soon to be opened and known as ‘Emporium Melbourne’ with an expected completion of March 2014.
The latest 380 Lonsdale Street acquisition is part of a highly tactical and well thought out campaign which has taken years in the making and is only now coming to fruition. The first move was in July 2013 when Hiap Hoe purchased their maiden property in Melbourne, a 3,795 square metre approved development site at 6-22 Pearl River Road in NewQuay. The approved tower designed by DKO architecture has real potential to become an iconic tower for Docklands and Melbourne, making it to No. 2 on our recent Top 5 list of approved projects.
Given the city's ranking as the world’s most livable city for the third year in a row, Hiap Hoe is enthusiastic about the development and growth potential Melbourne has to offer. “Melbourne’s CBD receives more than 1 million international visitors per year and the number of weekday local visitors to the area is estimated to be approximately 825,000 visitors per day. With the growing visitor numbers and no centrally located major developments in the vicinity, 380 Lonsdale Street is well placed to meet the needs of the ever-growing local population, business community, shoppers and visitors.”
Many recent property acquisitions have come via Asian property developers specifically from Malaysia, Singapore and China that are cashed up and ready to try their hand at Melbourne’s burgeoning property development scene. This is certainly very encouraging for our local economy and construction industry when vast flows of investment are being directed squarely at Melbourne. All we have to say is there is more to come, and you can bet that UrbanMelbourne.info will be here so you will be up to date with all the latest in Melbourne’s urban development progression.