PAG opens the gate to $260m Melbourne tower purchase

Dexus chief executive Ross Du Vernet has been selling off non-core office assets.
Hong Kong private equity and real estate company PAG is again looking to snap up a Melbourne office tower at a time when many rival companies are steering clear of the city.
The company is circling the Flinders Gate complex that adjoins Melbourne’s renowned Adelphi Hotel, with listed property group Dexus looking to sell it around the $260m mark after redeveloping the office complex five years ago.
The Asia-based manager has previously bought while Melbourne’s office market is at a low point, last year picking up a tower at 367 Collins Street from listed group Mirvac for about $340m.
PAG’s deal-making has been seen as a crucial marker of changing property values. Its earlier purchases include a Market Street office building it picked up from Dexus in Sydney in 2023 at 17 per cent discount to its book value. PAG also teamed with local funds house Fawkner to acquire the Midland Gate shopping centre in Perth for about $465m in 2023.
The Flinders Gate office complex comprises two boutique buildings and a multi-deck carpark. It could be slotted into a core mandate managed by the offshore group.
Dexus redeveloped the tower after winning builder John Holland to anchor the Flinders Street complex on a site opposite Federation Square. It also houses tenants including Netwealth, Cox Architecture and developer Time & Place.
The building at 180 Flinders Street has a historic facade on the lower floors, and its newer floor plates overlooking Flinders Street, with top floors sporting views over the Cathedral, Southgate and the Domain. The adjoining building at 189 Flinders Lane is refurbished office space on the iconic laneway, with some of the city’s top restaurants, bars and hidden gems downstairs.
Savvy groups are making their mark in Melbourne offices at a time when relatively few groups are buying, with many rival Asian-based groups avoiding Victoria due to its high taxation regime and tough rules for foreign investment.
Some also hold concerns about the slow return to the office as working from home has a strong grip in Melbourne and vacancy rates are persistently high at a time when the supply of new space is still being absorbed.
But private players are buying. Notably, property tycoon Harry Stamoulis, whose family fortune was originally struck in the Gold Medal soft drink empire, is also buying again, with his company in due diligence on 357 Collins St, which a Frasers-run trust is selling for around $200m.
Dexus declined to comment.