Central Equity Sells Pakenham Development Site For $24 Million

Gold Coast based developer Baycrown is believed to have snapped up the 46 hectare site, which is awaiting planning approval for a 550-lot residential subdivision.

The site is at the north-west corner of Princes Highway and Thewlis Road in Pakenham, near the Officer border and the Cardinia Road exit of the recently opened Pakenham bypass.

Central Equity is speculated to have paid about $20 million for the site in 2004, and has since submitted plans to council for a massive development which would include a large reserve and a school.

DTZ director – sales and investments, Ken Smirk, and Colliers International’s Theo George sold the property. Both declined to comment when contacted by The Age.

A spokesman from Baycrown failed to return calls yesterday.

Central Equity managing director Eddie Kutner also declined to comment on any part of the deal when contacted by BusinessDay.

However, early last month – when it listed for sale a medium-density development site in Port Melbourne – Mr Kutner told The Age Central Equity planned to focus on its “core business” of inner-city apartments, such as those it is marketing in Southbank and West Melbourne.

He said Central Equity would still stay in the residential subdivision game, but would focus on the northern and western “growth corridor” suburbs.

Central Equity quit apartment building in 2005, at a time a oversupply, particularly in Southbank, saw values start going backwards.

It delisted from the ASX in 2006, amid criticism executive salaries paid to the three main directors, was too high given a slow year in revenue.

It purchased the Princes Highway Pakenham site in 2004. The plan was to subdivide and build houses, however with the inner city apartment market recently reignited, this plan has changed.

The Pakenham site, like Bay Street Port Melbourne, is now surplus to the developer’s needs.

Unfortunately for Central Equity, the investment market turned during the campaign to sell the Pakenham property. It was first put to the market in September last year.

Despite the slowdown, the price paid for the property, believed to be more than $24 million, is close to the $25 million the price first attached to the property, when it was put to the market.

However agents are quick to stress that during last year’s property peak, development sites expected to fetch $25 million would often sell for between $30 and $35 million.

In Scoresby, about 25 kilometres south-east of the city, residential developer Mirvac paid $100 million to outbid Stockland for the 56 -hectare Austral Bricks site on Stud Road. The final purchase price was substantially more than the $80 million agents had anticipated when the site was first listed.

Since the start of this year, Mirvac has listed for sale a 43 hectare development site in Doreen, in Melbourne’s outer north-east. AMP has also put to the market a development site at Bungower Road Mornington.

Local agents say that recent share market volatility, which appears to have almost every listed developer group on the property sidelines, has allowed smaller developers to “buy in” whereas they were previously outmuscled.

Gold Coast based Baycrown, a private developer, arrived in Melbourne in 2001, when it purchased the Council of Adult Education centre at the corner of Flinders Street and Degraves Street.

It since developed that site, formerly a 5-level 1940s department store, into a 13-level apartment building of 376 units with ground floor retail.

In September last year, Baycrown paid $2.6 million for a development site at 883 Doncaster Road in Doncaster East, with a permit to build $15 million, 38-unit apartment building.

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco

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