Former Victoria Police HQ sold again as apartment projects struggle
Office investors are swooping on sites around the country that were once destined to become apartment developments, with the latest play on St Kilda Rd likely to end hopes of a luxury block designed by the late star architect Zaha Hadid being built.
The transaction, in which Malaysian company UEM Sunrise is set to sell off the former Victorian police headquarters at No. 412 on the leafy boulevard to Singapore-based SC Capital for about $108 million, is a sign of the continuing difficulties in launching residential towers.
The Asian group had sold off close to 40% of the units in the striking development before putting the site up for sale in July.
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The sale, which is subject to due diligence, will likely see SC Capital pursue a revamp of the office tower, instead of building the proposed Hadid-designed 152-unit Mayfair apartments.
SC Capital, backed by property experts Artifex, is instead likely to overhaul the internal and external aspects of the B-grade building that once served as the police headquarters.
UEM still stands to exit profitably as it picked up the 22-level offices four years ago for $58 million.
Colliers International agents Oliver Hay, Trent Hobart and John Marasco are handling the sale but have not commented. The parties also declined to comment.
Melbourne’s prestigious St Kilda Rd boulevard has seen a series of office deals where once residential conversions were order of the day. The buying also shows the dramatic rise in values of existing towers in city fringe locations and the desire of investors to get hold of the properties and then reposition them.
In July, a Hong Kong group finalised deals that left it owning two buildings worth about $170 million. The group, operating via trusts controlled by Mars Family Holdings, picked up one building at 420 St Kilda Rd from Vantage for about $98 million. The Mars-linked company, then bought the neighbouring property at 424-426 St Kilda Rd for about $70 million.
That property was sold by Chinese-backed developer Woodlink, which had once proposed the $360 million Illoura House apartment project on the site.
Woodlink had won a permit for an 18-level mixed-use building with 163 apartments and 176 hotel rooms.
That building will now be refurbished and re-leased as the unit project no longer stacked up in a harsher climate for pre-sales.
Earlier this year in Melbourne Golden Age and partner Starwood Capital dumped plans for a $600m apartment and hotel complex on Melbourne’s Spring Street and sold the site to Proprium Capital Partners Australia for about $112 million.
Charter Hall and Mirvac last year swept up former Melbourne apartment projects where they are now planning office towers.
UEM Sunrise is still pressing ahead with other towers.. It is completing the Aurora Melbourne Central mixed development in Melbourne.
But last month a deal with Singapore-based Ascendas Hospitality Trust that was to buy the serviced apartment component of that tower for $120m fell over.
The Malaysian company said at the time the mutual termination would allow it to “seek and explore other opportunities that are more beneficial to UEMS in line with the group’s strategic objectives”.
UEM Sunrise remains one of the most successful unit developers in Melbourne.
This article originally appeared on www.theaustralian.com.au/property.
