Asian investors snapping up Melbourne development sites: Savills
Demand for inner-city Melbourne land from Asian developers has reached “unprecedented” levels over the last 18 months, according to Savills Australia.
Savills agents have negotiated the sale of more $100 million worth of development sites over the last 18 months in Melbourne, with more than half of this amount spent in September on two sites.
In the last two weeks Savills had sold a 3,200-square-metre site with potential for more than 500 apartments at 224-250 La Trobe Street for $29.2 million, and an 8,000-square-metre office building on a 900-square-metre site at 150 Queen Street for $25.5 million, the latter earmarked for residential conversion by purchaser Chip Eng Seng of Singapore.
Another major development site – a 2,250-square-metre site with a permit for 368 apartments at 420 Spencer Street, West Melbourne – is currently on the market for around $17 million, with significant local and Asian interest already registered. The site is being marketed by Savills head of division for city sales and investments Clinton Baxter and Nick Dempsey via expressions of interest closing on October 14.
Before these purchases, Asian developers have spent an average of $12.5 million per month buying up another six sites, with buying activity kicking off in March 2010.
Other Asian buyers had included SP Setia and Mammoth Empire Holdings both from Malaysia along with many mainland Chinese private developers.
According to Savills divisional director of CBD sales and investments Nick Peden, buyers from China, Singapore and Malaysia have been attracted by Australia’s financial stability and Melbourne’s comparatively inexpensive land values
“With the global economy experiencing some uncertainty, Australia, and more particularly Melbourne, is the destination of choice for Asian developers seeking to secure development land for high density apartment projects,” Peden says.
“Melbourne offers sustained population growth, inexpensive land compared to home markets, the potential for significant growth, the benefit of freehold title, and it’s stature as the world’s most liveable city,” he says.
“This Asian demand really is unprecedented.”
Clinton Baxter says the agency has sold 17 properties with residential development potential since March last year with more than half of those to off-shore Asian purchasers.
“What has changed recently for these buyers, and particularly Asian developers, is Melbourne’s relative stability in an increasingly uncertain global economic climate.
“In many cases they have a significant, additional, competitive advantage over local developers by being able to source funding from off-shore, and in doing so enjoying cheaper costs of debt whilst avoiding the onerous capital restrictions of the local banks.
“Given the current enquiry we have on the books we expect sales to Asian buyers to continue to play a significant hand in the sale of development sites across Melbourne,” he says.