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UBER green property investment group Drapac will sell two of its most prominent central business district development sites, in deals expected to reap around $60 million.
The sale includes Drapac's flagship City Mazda site at 388 William Street, opposite Flagstaff Gardens, and the site at 9-39 MacKenzie Street, near the Royal Exhibition Building at the north-eastern tip of the city.
The sites will be sold with permits to develop a mix of offices, apartments and shops.
Drapac managing director Michael Drapac described his company's decision to sell as a classic counter-cyclical play. It bought the sites about four years ago, when capital values in the city were languishing.
"We invested in these sites and obtained planning approvals to build commercial office space," Mr Drapac told Capital Gain. "But the market is now showing that high-rise residential development is a far greater priority and as this is not our core business, we are selling the sites."
News of the sale comes weeks after a frenzy of residential developers pushed the price of the 1030-square-metre Stork Hotel on Elizabeth Street to almost $12 million, or more than 80% above its reserve.
In comparison, the City Mazda site measures 11,000 sq m, with separate permits to develop more than 70,000 sq m of offices and a 26-level apartment building. It is expected to fetch $40 million.
The MacKenzie Street site measures 4000 sq m and will be sold at auction either as two lots or as a whole. It is expected to sell for about $20 million in total.
Knight Frank director Clinton Baxter is selling the sites with Paul Burns.
Drapac is one of Melbourne CBD's largest commercial property land-holders. Last month, it launched the $300 million Drapac Sustainability Fund, dedicated to holding only sustainable property assets, and is believed to be the first such fund in Australia.
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