​Melbourne development sites give locals the advantage

Local buyers and foreign buyers appear to be head-to-head in Melbourne’s development market, according to a JLL study, however they believe that locals are at a distinct advantage.

The study looked at buyer profiles of major development sites across Melbourne’s CBD, City Fringe, Docklands and St Kilda Road over the past 12 months. It found that 49% of the 39 properties sold from February 2013 to April 2014 were domestic buyer purchases.

When looking at the dollar value of $1 billion in transactions over the past 12 months, 51% came from domestic buyers, said JLL director, sales and investments, James Kaufman.

“Of the 39 major site sales JLL recorded, CBUS' purchase of 447 Collins Street for $91 million was the only land sale where the developer intended to undertake a commercial development,” he said.

“Generally foreign developers have a strong preference for sites that are offered for sale with the benefit of planning permits. Sites with permits make the assessment process significantly less complicated and remove uncertainty.”

He said that domestic developers have a “much deeper understanding” of the town planning process, providing them the advantage when bidding without a planning permit.

“This is evidenced with the sale of 181 Fitzroy Street, St Kilda (pictured above) and 85 Spring Street, Melbourne. During both campaigns, the marketing attracted interest from foreign buyers, however the planning risk put the local developers in the best position to secure the sites,” he said.

This was purchased by Grocon, with planning approval lodged for a 38-level, $300 million 370-apartment development at 85 Spring Street.