Developer flips St Kilda Rd site for $10m profit in two years

The group announced the sale of 596 St Kilda Rd for $34 million to a Taiwanese-based developer, who is understood to be a first time entrant to the local market.

Lian Beng paid approximately $24.35 million for the block of older apartments in October 2015, then gained planning approval for a 170-unit project and received several unsolicited offers for the site.

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Lian Beng executive director Matthew Ong says the group is not exiting the Australian market and plans to use the proceeds for further investments in Australia.

“We are just recycling capital,” Ong says. “We are looking to find appropriate investments in both Melbourne and Sydney in the immediate term, we see Australia as a stable and prudent location for our diversification.”

The developer recently bought an 18-storey office building at 50 Franklin St for $51.5 million.

It also traded a seven-storey office block at 247 Collins St for a healthy profit, selling it for $35 million in April after buying it for $23 million in 2015.

It was interesting to observe the aggressive interest, not only from private developers, but also some of the household institutional names who haven’t actively participated in this space for several years

CBRE’s Mark Wizel, Josh Rutman and Lewis Tong marketed the site in conjunction with Colliers International, while Thomson Geer’s Eu Ming Lim acted on behalf of the vendor.

“Despite some of the negative commentary surrounding Melbourne’s apartment market, it was interesting to observe the aggressive interest, not only from private developers, but also some of the household institutional names who haven’t actively participated in this space for several years,” Wizel says.

Tong says the ongoing activity of established offshore groups in Melbourne is giving “great confidence” to new entrants from China, Malaysia, Singapore and other parts of Asia.

The St Kilda Rd corridor has been drawing interest, with an office building at 420 St Kilda Rd understood to be in due diligence.

The sale comes as average values in Melbourne’s established unit market have been softening compared to values for houses.

Unit values in Melbourne slipped 2.5% over the three months to June 30, compared with a 1.9% rise in house values, according to property researcher CoreLogic.

Melbourne unit values are up just 1.5% compared to 12 months ago, while house values rose 15 per cent over the same period.