OPSM’s Bourke St Melbourne building sells for $15 million

A local investor with ties to Malaysia has paid $15 million for a Bourke Street, Melbourne property on a yield of just over 3% in a deal brokered by Savills’ directors Clinton Baxter and Nick Peden.

Mr Baxter said the resulting 3.07% yield for the 384-386 Bourke Street property was a further demonstration of the ongoing yield compression for well-located freestanding CBD properties while the land rate of $29,182 a square metre also underscored investor’s continuing confidence in the market.

"Whilst some pundits were predicting an easing of land values following Planning Minister Wynne’s recent announcement of interim planning controls, this transaction along with our recent sale of 10-16 McKillop Street ($10.5m) illustrates that land values remain strong with investors appreciating that over the long-term the CBD built environment simply must increase in density to accommodate our rapidly rising population.

Mr Peden said interest in the property had been driven by the property’s location just 60 metres from the Bourke Street Mall, the large 514 square metre site with two street frontages offering significant future value-add potential, and the lease to longstanding blue-chip tenant, OPSM.

“The property’s numerous attributes attracted extremely strong interest throughout the sale campaign, particularly from offshore groups, eventually selling to a local investor with strong links to Malaysia who wishes to retain the property as-is as a long-term investment.

He said the three level building was sold subject to a lease to OPSM at a net rental of $460,576 per annum.