Office block shatters St Kilda Rd record
A St Kilda Rd office block has smashed the leafy boulevard’s record by almost $20 million after an eye-watering $163 million sale.
And, incredibly, the seller rejected an even higher offer for 509 St Kilda Rd, Melbourne.
Even so, the Sydney-based Beville Group — an investment firm headed by John Beville — collected a $108 million windfall from the sale after they bought it for $55 million in 2009.
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It works out to $12 million a year.
The 6000sqm, double-fronted property’s size marked it as the largest to hit the market in 2018, and it appealed to a long list of local and offshore buyers, including a mainland Chinese buyer, according to CBRE’s Kiran Pillai.
“The Beville Group’s timing was perfect,” Mr Pillai said.
“There was a really good level of bidding and three rounds were required to separate the purchasers.”
Tenants at the building include Fair Work Australia, the Italian Consulate General, Fuji Xerox and the world’s second biggest insurer — AIA.
While an undisclosed bid higher than $163 million was made for the property, the Chinese offer was accepted as it was made unconditionally — with the buyer waving the right to a traditional due diligence period.
The previous record sale on St Kilda Rd was a $144.4 million deal for 417 St Kilda Rd made last year.
A year ago unconditional offers were considered rare, but as Melbourne’s office market has tightened and scope for increased rents emerged off the back of its rising population, the city had become hot property, according to Pillai.
“It has been a rare thing, but it is becoming increasingly done in office transactions,” he says.
“The fundamentals in Melbourne’s office market are stronger than anywhere else in the country.”
He says it is likely poorer conditions in Melbourne’s residential market are raising the profile of the city’s commercial property market at the moment.
This article from the Herald Sun originally appeared as “St Kilda Rd record smashed as office block soars $100 million in nine years”.
