This article is from the Australian Property Journal archive
A RARE freehold building in Collins St in Melbourne's CBD has sold for the first time in 16 years for $8,888,888, almost $3 million above the reserve and on a yield of 2.2%.
Following frenzied bidding from 12 contenders at an onsite auction, the CBRE Melbourne City Sales team sold the property at 415-417 Collins St. Whilst a Chinese buyer would have loved to have acquire the building for the lucky number of $8,888,888, the property was knocked down to an Australian resident of over 25 years, who secured it as a long term investment.
Associate director Josh Rutman said a crowd in excess of 240 people were on site and there were 12 bidders in contention with over 50 bids submitted.
“Bidding for the property opened at $5,000,000 and quickly raced to $6,000,000 with the property being declared on the market at $6,200,000. As has been the pattern of many recent auctions in Melbourne the strongest level of bidding came from Chinese Buyers who battled it out to the end with the final price being settled at $8,888,888.
“Today was a reflection of the strength of the market on so many fronts. Today we saw two Melbourne based Chinese Investors flex their muscles in an attempt to own their part of our most famous streets,” he added.
Rutman said the buyer was attracted to the four-level building, home to the famous Sherlock Homes Pub between William and Queen streets, given the infrequent number of similar properties that get offered for public sale in Melbourne`s CBD.
“It is wonderful to see such a diverse range of bidders at the auction today,” Wizel said.
“Chinese buyers are definitely in the gun of the media at present, they are being attributed with the blame for a wide range of factors that are currently effecting the rapid growth of both domestic and commercial property in Australia, the consistent criticism couldn`t actually be further from the truth and it is about time that we recognise the systematic induced factors effecting housing affordability, not the influx of Chinese buyers,” he added.
Wizel said the property was owned by prominent Melbourne business identities associated with the building company ProBuild, who would have been very pleased to see the property achieve in excess of $2,600,000 when it was declared on the market at $6,200,000.
“We are experiencing the strongest selling conditions in the Melbourne CBD in over 30 years and there is no fundamental indicators pointing to why it should slow down.
“We think that buyers just feel safe in the CBD, the transport works, the grid works, and you add to it the stability of the commercial office market and stability of retail and food & beverage and it becomes clear to see why Melbourne is clearly on an International Stag,” Rutman continued.
According to Wizel, property prices in the CBD are now easily eclipsing the highs of 2007 and he expects it will continue to increase.
“The cost of debt is low, confidence is improving both from consumers and tenants and this is having a very positive effect on investor sentiment.
“We thought it would be a long time for properties to consistently trade in the CBD on yields below 5%, its come a lot quicker than expected and we think that it is here to stay as supply of sub $20,000,000 assets in the Melbourne CBD continue to be seldom offered,” Wizel concluded.
Australian Property Journal
