St Kilda Rd office doubles value to $163m in four years

Beville Group is selling 509 St Kilda Rd for $163 million.

Property tycoon John Beville has made a return to form, striking a lucrative deal to sell an office block on Melbourne’s leafy St Kilda Rd for $163 million to Chinese mainland investor Da Xie.

The boulevard has been buzzing with activity as buyers including Singapore’s Mapletree, Wing Tai Holdings, and Tong Eng all buying office buildings as the boom in city pricing extends to the fringe.

The sale was struck on a fully leased yield of 4.96% and a building rate of $8300 per sqm, setting new benchmarks for the St Kilda Rd office precinct.

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Xie’s purchase at this pricing shows the area is drawing stiff interest from international buyers. The vendor almost doubled his outlay on the office tower in a deal that came to light after Xie slapped a caveat on the asset at 509 St Kilda Rd.

Beville’s private vehicle bought the building from Calibre Capital for $84 million less than four years ago, and reaped a healthy income return throughout his period of ownership.

The prominent 1990s building occupies a high-profile, 6070sqm site backing onto Fawkner Park and was tipped to draw interest from residential players. The 19,650sqm block is fully leased to tenants including the federal government, Fuji Xerox and life insurer AIA. Agents on the deal were CBRE’s Kiran Pillai, Josh Rutman, Mark Wizel, Lewis Tong and Luke Etherington.

Industry sources had earlier speculated that three buyers had been interested, with Singapore’s Allgreen named as a party that had looked at the asset.

Several other offices have changed hands on the boule­vard, with Abacus Property and Wing Tai Holdings snapping up VACC House for $95 million and Tong Eng Group buying a $77 million tower from the Myer family. Other recent sales in the inner south include Jeanswest owner Glorious Sun’s purchase of 324 St Kilda Rd for $42 million, Mapletree buying No 417 for $145 million, Rockworth Capital buying No 390 for $98 million and Vantage Property Investments buying No 420 on behalf of KKR for about $69 million.

“The sale is a strong indicator of the comfort buyers have in St Kilda Road real estate and the market’s long-term potential,” Pillai says.

“Domestic and international buyers were vying for the asset, with the purchaser selected due to the unconditional nature of the offer, which wasn’t the highest bid received but one which offered minimal risk to the vendor.”

Tong says the deal shows there was a lot of interest from European and Asian investors who were looking for office and retail investments in Melbourne.

The buyer was represented by Thomson Geer’s Eu Ming Lim and the vendor by Jennifer Huppert of KHQ lawyers.

– with Ben Wilmot

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