Meriton shuns apartments for serviced accommodation in Melbourne
Unit giant Meriton has joined the ranks of Sydney developers forging into Melbourne but its entry is taking a twist with the company planning to build a serviced apartment project rather than sell flats in the sluggish market.
The group, led by apartment tsar Harry Triguboff (ranked the third wealthiest person in the country in The Australian’s The List), has snapped up a site in Melbourne’s King St in the city’s first major permit-approved development site sale this year.
Triguboff, who has wealth of about $12.31 billion, has 4500 serviced apartments and another 3700 units which are being rented out.
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That combined number could reach 10,000 this year and the tycoon, best known for his Sydney and Queensland towers, will develop a Meriton Suites apartment hotel.
He follows the likes of Iwan Sunito’s Crown Group, which is undertaking apartments in Southbank, and the play appears well-timed as some offshore players are dumping their developments, giving the cashed up Meriton an opportunity to come into the market.
The group has been advertising nationally seeking development-approved sites and the Melbourne property was bought for about $29 million.
The site at 146 King St was sold by Besgate Development via Colliers International’s Trent Hobart, Oliver Hay, David Sia and Jozef Dickinson.
The 792sqm site was offered with a planning permit in place for a 57-level building including 263 residences, designed by Rothe Lowman architects.
The existing property, located between Bourke St and Little Collins St in Melbourne’s CBD financial precinct, comprises a three-storey vacant office and retail building.
“The competitive sale process generated a total of 11 offers, which is a reflection of the ongoing strong interest in permitted apartment development sites in the Melbourne CBD and fringe areas,” Hay says.
He adds that the site was chased by residential and hotel developers, student accommodation groups and owner occupiers.
“Planning permits like this one achieved by Besgate and Korda Mentha are fast becoming a rare commodity, with the adverse affects of (Victorian) planning amendment C270 only now becoming relevant,” Hobart says.
The ALP government introduced tougher rules in 2016 to curtail tall buildings being too close and overshadowing, and also set up a value capture system.
“With only about four permits issued in the last three years in the CBD, we will be facing a significant undersupply of development sites and development of any kind in the CBD in the years to come. The race to secure the last development sites in the CBD and the city fringe is on,” Hay says.
This article originally appeared on www.theaustralian.com.au/property.
