500 apartments coming to The Glen shopping centre

The Glen is set to undergo a $490 million overhaul. Picture: Supplied

Listed retail landlord Vicinity Centres has picked Jeff Xu’s Golden Age Group to develop more than 500 apartments above The Glen shopping centre in Melbourne’s southeast. 

Vicinity and co-owner the private Perron Group agreed to sell the air rights to the residential and commercial developer, with the project set to be the first time a large listed shopping centre owner has worked so closely with a Melbourne-based Chinese developer on a residential development.

Vicinity and Perron are redeveloping the mall in Glen Waverley, 25km southeast of the Melbourne CBD, and planning three residential towers.

Commercial Insights: Subscribe to receive the latest news and updates

Vicinity said the apartment deal had cut the redevelopment costs to $460 million, from $490 million, of which Vicinity’s share was 50%.

Vicinity — backed by billionaire John Gandel — expects returns on the mall to improve as a consequence. After completion of the redevelopment, an initial yield of more than 6% and an internal rate of return of more than 10% are likely, Vicinity says.

The Glen David Jones $490 million upgrade

The Glen’s retail component will receive a significant upgrade as part of the redevelopment.

The first stage of the retail development is set to open late this year and most of it has been leased, the company says. Tenants include Aldi, Woolworths, Coles and 60 specialty stores.

The retail development is expected to be completed by 2020. At that point, the mall will increase to 78,000sqm of gross lettable area, featuring a fresh food market hall, two dining precincts, a town square, David Jones and international brands.

Golden Age Group has a portfolio of $4.2 billion worth of projects.

This article originally appeared on www.theaustralian.com.au/property.