Chinese developer snaps up South Yarra site for $18 million

A Chinese developer has acquired a South Yarra residential development site for $18 million.

The 2,393-square-metre site at 3-9 Claremont Street, which has an approval for 236 apartments plus office and retail accommodation, was bought by a “well-known developer linked closely to a city near Shanghai in China”.

It is situated close to South Yarra Train Station, the Chapel Street retail ship and the Woolworth's Shopping Centre.

The sale price translates to a rate of $7,521 per square metre of land and $76,271 per unit site based on the approved permit.

The deal was negotiated by Mark Wizel and Justin Clarkson from CBRE.

“This represents the strongest price paid for a development site in South Yarra or Prahran of this scale over the past two years,” says Wizel.

“We received several expressions of interest and short listed three parties all of whom were associated with interests from mainland China. This is further evidence of the underlying confidence that Chinese groups have in the Melbourne residential development sector as well as the underlying interest they have in divesting funds to Australia.” 

Wizel says the 10% decline in the value of the Australian dollar since August 2011 has helped drive Chinese developer interest in the Australian market. 

“In the case of Claremont Street, the added attractions were the approved planning permit and the strong end market for apartments in South Yarra,” he says. 

The property is the latest in a series of major inner-Melbourne residential sites to be acquired by Chinese developers over the past two years.

A year ago, the Deague family's Asian Pacific Building Corporation sold its 3,037-square-metre site at 10 Daly Street, South Yarra to the Lyz Property Group based in China's Jiangxi province for $28.5 million, equating to about $9,300 per square metre. The site, which included the neighbouring historic Arlie Mansion, the former home of prime minister Stanley Bruce, has approval for up to 426 apartments.

In September 2010, the China Ever Bright Group bought the 1.5-hectare Stonington Mansion development site in Malvern for just under $30 million – a $17 million discount to the previous price paid by property fund manager Ashington in June 2008. The site has approval for 31 apartments, 14 luxury houses, 22 townhouses and 12 "townhomes". 

“We estimate that mainland Chinese groups have spent in excess of $170 million on acquiring major inner city sites over the past two years with an additional $130 million in sites being sold to development companies with direct interests in Singapore and Malaysia,” he says.

Wizel says in CBRE’s experience developers from mainland China are generally more comfortable acquiring suburban - rather than CBD - sites in locations such as South Yarra, Prahran, Brighton, Balwyn and Doncaster while Malaysian and Singaporean developers tended to focus on more ‘core’ locations such as the Melbourne CBD and St Kilda Road.

The sale of the Daly Street site and Stonington Mansion site was part of an 18-month injection of Asian development capital into the Melbourne market following the Foreign Investment Review Board lifting its restriction in 2009 to allow 100% of a project to be sold to offshore buyers provided the development has more than 100 apartments.

 

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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