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Queensland-based fund manager Sunsuper will make a nifty profit from the sale of a St Kilda Road office building it bought at a trough in the market ten years ago.
Capitalising on the favourable quinella of low vacancy and rising rents – and on the back of some major sales which have “re-rated” the once troubled precinct, Sunsuper is expected to make around $30 million from the sale – $9 million more than what it paid in 1998.
At that price, the B-grade, 7688 square metre office building at 570 St Kilda Road would sell on a yield of about 7.5 per cent, and achieve a sales rate per square metre of almost $4000.
The building sits on about 2,323 square metres of land with street frontage to St Kilda Road and Queens Lane to the rear, which accesses a 144-bay car park. It is currently dwarfed by cranes, with residential apartments under construction west and south of the 8-level building.
Sydney-based developer Stockland recently purchased the Vision Australia site across the road and is also planning apartments.
AMP Capital Investors, which manages the Sunsuper portfolio confirmed in a written statement it will sell 570 St Kilda Road, but declined to elaborate why. Speculation is the fund considers the St Kilda Road office market to be at its peak.
Colliers International sales director – investment sales Pat Burke, who is marketing the property with Tim Bolton, said the residential conversion of so many St Kilda Road buildings is putting upward rental pressure on those office buildings that remain.
He also said investor demand has been strong with the three largest recent sales being snapped up by each of a listed property group, a private investor and an owner occupier.
This includes Dexus Property Group which paid $65.5 million for 441 St Kilda Road, and local investor Yong Quek who paid $40.35 million for 420 St Kilda Road.
Owner occupier Flight Centre also recently paid $31.3 million for a part-vacant office building at 436 St Kilda Road which it plans to occupy.
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