Mars Group to sell St Kilda Road site at a loss

The discount tells two stories: many offshore buyers paid bumper prices at the peak of the last property cycle, and there has been a significant post-pandemic slump in office values.

​The discount tells two stories: many offshore buyers paid bumper prices at the peak of the last property cycle, and there has been a significant post-pandemic slump in office values. 

By Nicole Lindsay
November 11, 2023 — 5.45am
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An overseas investor is preparing to sell 420 St Kilda Road at a substantial discount to its 2019 purchase price.

Records show Hong Kong-based Mars Group paid $98 million for the 10,435 square metre, 10-storey building, but listed it for sale this week for about $85 million.

420 St Kilda Road is expected to sell for about $85 million.

The 13 per cent discount tells two stories: many offshore buyers paid bumper prices at the peak of the last property cycle, and there has been a significant post-pandemic slump in office values.

The A-grade, glass-walled office tower is on a large 2286 sq m site on the corner of Kings Way, and has a three-star energy rating.

Cushman & Wakefield agents Leigh Melbourne, Nick Rathgeber, Daniel Wolman and Oliver Hay have the listing.

The move to sell comes six weeks after Mars sold Illoura Plaza, across the road at No. 424 St Kilda, to Tim Gurner’s GIC-backed Build-to-Rent joint venture for around $80 million. Gurner is reportedly planning an $800 million, 180-unit luxury project on the site.

Rolex disposal

Swiss watchmaker and retailer Rolex is selling its CBD sub-penthouse office space at 18 Oliver Lane. The 280 sq m on level seven is vacant, with Rolex moving to a new office at 104 Exhibition Street.

The eight-level concrete building on Oliver Lane, with views to the Forum theatre, was designed by John Monash in 1905, and revamped by new owner, fund manager Henderson Marks, in 2006.

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Three new levels were added in 2015, one of which was sold to Rolex for just under $2.8 million.

The site of the Malaysian Consulate at 16 Claremont Street sold for $6.5 million.

Knight Frank agents Nick Bisset, Stephen Kelly and Langton McHarg are running an expressions of interest campaign for the property. They declined to comment on a price guide.

However, the most recent deal at nearby 41 Exhibition Street was struck at $15,000 a sq m, which suggests a price of about $4.2 million.

Sydney appetite

A Sydney investor has come up trumps in South Yarra, nabbing the new Malaysian Consulate site at 16 Claremont Street for $6.5 million.

The glass-walled office tower at 16 Claremont Street, South Yarra, has a three-star energy rating.

Listed Malaysian developer EcoWorld, which completed the 26-level apartment tower on the site in 2020, was the vendor.

The 954 sq m office on levels one and two was sold with a fresh 10-year lease to the consulate, which recently moved from long-held digs on St Kilda Road. The deal reflects a yield of 6.9 per cent from $451,000 a year in rent.

The sale was brokered by Cushman & Wakefield agents George Davies, Anthony Kirwan, Raphael Favas and Jeff Ha.

Davies said there were five first-round offers for the property – three from Sydney, one from Singapore and one from Melbourne.

“Sydney buyers have been very aggressive,” Davies said. They expect to get more for their cash in Melbourne, compared with the more expensive and stock-starved Sydney market.

A Sydney owner-occupier was also the underbidder on another CBD strata office sold last week.

The 247 sq m site at 2, 11-19 Bank Place was sold to a local high-net-worth investor who liked the location and the historic building, Kirwan said.

The $1.75 million price represents a building rate of $7028 a sq m.

Investors have been rare buyers during a year marked by slim pickings, and more successful owner-occupiers. However, spring has resulted in a number of fresh offerings.

The C & W team is marketing two spaces beneath a new 65-level apartment tower at 299 King Street, on the corner of Little Lonsdale Street.

The Aspire tower was developed by ICD Property and MaxCap, and achieved project completion last month. It is across the road from the Hotel Sophia, which is also for sale.

The 99 sq m lot 1 has six-metre ceilings and is expected to sell for between $1.6 million and $1.8 million, possibly to an office user.

The 188 sq m corner space is likely to attract a food and beverage operator and is tipped to sell for between $2.6 million and $2.8 million.

The agency is also selling a vacant office on level 2, 401-405 Little Bourke Street, in the Hardware Lane precinct. The 402 sq m site comes with two car parks and is expected to fetch around $3 million.

Preston car yard

One of High Street Preston’s large car yards has come to market following last week’s state government announcement that the strip is one of 10 key activity zones earmarked for streamlined planning controls.

The 5600 sq m site at number 496-516, on the corner of Youngman Street, includes warehousing.

Across the road is a string of car showrooms occupied by the Ralph d’Silva Motor Group. Next door is a Quest hotel recently built by the Pellicano Group.

North of Bell Street, it is not far from the controversial Preston Market, where Salta Properties and locals have been at loggerheads for years.

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Records show parts of the High Street site was put together by the vendor more than 30 years ago: No. 496 was purchased for $545,000 in 1987, and $800,000 was paid for No. 516 in 1992.

Stonebridge agents Andrew Milligan and Julian White, together with Ryder Commercial’s Mark Ryder, have the listing.

The selling price is expected to fall somewhere between $2500 and $3000 a sq m, or $14 million to $17 million, but it could establish a new benchmark for land values north of Bell Street.

Early last year, Build-to-Rent group MAKE paid $40 million to McMillan Property Group for the 1.6 hectare Preston Toyota site at 687-717 High Street – around $2600 a sq m.

Down on St Georges Road, the Assemble Communities and Housing Choices Australia joint venture on the corner of Oakover Road was rezoned last month to mixed-use, paving the way for a four-building project with 480 apartments, together with office and retail space. MAB Corp. has also lodged plans for the next stage of its project in the same precinct.

EV attraction

We can expect office working incentives to ramp up in the new year, but co-working group CreativeCubes is out of the gates early with its new Electric Car Club.

CreativeCubes has bought a Tesla for its Collingwood offices on Langridge Street. It will be available for all members to book and use during the week, or even on the weekend.

The move follows the High Court’s recent decision to axe the Victoria government’s electric vehicle tax.

The CreativeCubes scheme is being rolled out by tech transport provider Outbound through its EV-on-demand app. More Teslas are expected to be added to CreativeCubes’ other workspaces soon.

CreativeCubes founder Gawin Fernando said: “A large number of our members rely on public transport or cycle to work, but we’ve noticed they often need to venture out to meetings and appointments during their day.”

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