This article is from the Australian Property Journal archive
ONLY one investor has managed to score a massive windfall from one of the most traded St Kilda Road office buildings in recent history, but it was not the latest seller.
Edinburgh-headquartered global investment manager Abrdn, formerly Aberdeen Standard Investments, has cashed a St Kilda Road office building for more than 30% below what it paid over 10 years ago.
Melbourne-based investor John Marro’s Marwood Property Group has snapped up 432 St Kilda Road for $28 million.
The property was sold with a quick five-day settlement in a transaction handled by JLL’s Josh Rutman, Tim Carr and Piper Dedrick.
Formerly ANL House, the 12-storey property comprises 9,128 sqm of space and is largely unoccupied with a 69% vacancy and a 0.3-year weighted average lease expiry.
The sale represents a capital loss for Abrdn which purchased the building from Yong Quek’s Prime Value Asset Management in 2014 for $41.6 million.
In the building’s sale history over the past 30 years, only one investor – Quek can claim to have scored a massive windfall, after paying $21.55 million in 2002.
Prior to that, Melbourne developer Clement Lee sold the property in 1998 for $16.2 million.
“This landmark sale highlights the compelling opportunities within in the Melbourne office market for those willing to look beyond the current challenges facing the sector,” said Rutman.
This transaction follows Australian Unity Office Fund’s sale of 468 St Kilda Road to Bayley Stuart Capital for $41.75 million in November last year.
AOF’s sale was at a discount of over 30% below the independent valuation of $62 million, and around 50% below its peak value, fetching a price almost identical to 18 years ago, effectively wiping out nearly two decades of capital growth.
“St Kilda Road’s challenges are well-documented; however, this precinct remains one of the most liquid markets in the country. In Q4 2024 alone, nearly $100 million worth of assets changed hands, contributing to approximately $730 million in completed sales since 2021.
“We’ve seen average annual transaction volumes since 2020 hover in the $100 to 150 million range for St Kilda Rd, so it’s a clear sign of renewed appetite to see around $100 million of assets change hands in 2024.
“We expect this trend to continue into the early part of the new year with other assets in the precinct close to trading,” Rutman said.
