This article is from the Australian Property Journal archive
BUOYED by the strength of the St Kilda Rd office market, SC Capital Partners will splash $40 million on refurbishing the newly acquired former police complex, which had been slated for a Zaha Hadid-designed apartment project.
The Singapore-based group has paid $107.08 million for the vacant 412 St Kilda Rd tower on behalf of its RECAP Fund series, continuing a run of sales along the CBD fringe boulevard involving offshore capital and ongoing value uplifts.
Malaysian group UEM Sunrise had offered the tower to the market after abandoning plans for the 152 unit Mayfair project, which had suffered slow sales in the softening residential market.
The sale echoes Woodlink opting to sell off nearby Illoura House at 424-426 St Kilda Rd, which had approval for an 18 level mixed use building with 163 apartments and 176 hotel rooms, and sold for $70 million to an Asia based buyer that will use the property as an office play.
UEM Sunrise will have to refund contracts for 40% of the off the plan sales, although the sale price is nearly $50 million above what it paid just four years ago.
SC Capital Partners has retained local investment manager, Artifex Property Group to undertake the $40 million refurbishment of capitalise on its strategic location above the new Anzac Train Station, one of five new stations to be delivered by 2025 via the $11 billion Metro Rail project.
“This acquisition confirms our belief in the St Kilda Road office market,” chairman of SC Capital Partners, Suchad Chiaranussati said.
“With vacancy at sub-6%, the lowest since July 2001, supported by limited supply and robust tenant demand, the property is very well positioned to deliver strong performance.”
Mark Frinsdorf, director of Artifex Property Group, said this would be “the most significant office regeneration project the St Kilda Rd precinct has witnessed in the past 20 years”.
Trent Hobart and John Marasco from Colliers negotiated the off-market deal.
The 19 level office building has 16,285 sqm of net lettable are with 174 car parks. Positioned on the corner of St Kilda Rd and Bowen Cr, it is opposite the mostly vacant 1 Bowen Cr tower that has just been picked up by private developer Brendan Sullivan.
“The building has exceptional fundamentals and our planned refurbishment will provide future tenants with the highest quality accommodation and amenity in St Kilda Road,” Chiaranussati said of 412 St Kilda Rd, which features views of the Shrine of Remembrance, Royal Botanic Gardens, the Melbourne CBD, Albert Park and Port Phillip Bay.
Planned refurbishment of the 1984-built tower will begin early in 2020 and be available for occupation in the first quarter of 2021.
Elsewhere on St Kilda Rd, KKR and local partner Vantage Property Investments recently sold their a 10-storey office building tower at 420 St Kilda Rd to an offshore buyer for at least $92 million, barely 18 months after paying Singapore’s Chip Eng Seng $68.84 million – which itself had paid only $45.28 million to Yong Quek in 2013.
The deals reflect ongoing demand and withdrawals in the precinct pushing up capital values along St Kilda Rd jumped by between 90% and 115% over the five years to the beginning of 2019, as demand spilled from similarly sizable growth in the CBD.
Last year, Shijizhuang-based Runjiang Investment acquired the nine-level office tower at 509 St Kilda Rd for a precinct record price tag of $163 million through private investor Michael Xie, nearly double vendor John Beville’s investment on the asset in four years.
Late in 2017, Perth-based syndicate Lester Group offloaded 324 St Kilda Rd for $42 million after buying it only four years earlier for $22 million. Further down the boulevard, Lian Beng Group and KSH Holdings sold the 596 St Kilda Rd site for $34 million.
That followed Singapore-based Mapletree spending a then-record $145 million for the A-grade 417 St Kilda Rd complex. The vendor, a syndicate overseen by Newmark Capital, had bought the 20,411 sqm 10-storey tower for $81 million in 2012 before refurbishing and adding a retail component.
