Chinese investor spends $12 million to acquire King Street corner

The building sits on a 304 square metre corner block with redevelopment potential.

A low-rise mixed-use building near the south-west tip of the Melbourne CBD has sold for $11.98 million to a China-based investor.

The sale price for 26-32 King Street, on the south-east corner of Flinders Lane, reflects a low 2.9 per cent passing yield.

The vendor, Melbourne investors, were represented by Savills brokers Clinton Baxter, Ming Li and Jesse Radisich.

The five-level building with ground floor retail, and upper storey offices, and containing 1200 sqm of lettable area, last sold eight years ago for $5.1 million.

It sits on a 304 square metre block with redevelopment potential.

A 349 sqm site at 33 King Street, opposite, is making way for a 30-level, 241-suite hotel. This hospitality asset sold for $91.3 million in August to Indian investor InterGlobe, established in 1989 by father and son Kapil and Rahul Bhatia.

Last year, following a marketing campaign managed by a different agency, it was speculated 26-32 King Street was being acquired by Lorenz Grollo and Kuwait’s St Martins Properties, the two co-owners of the landmark Rialto Towers, across the road to the north.

Mr Grollo and St Martins Properties had been buying King Street sites adjoining Rialto Towers over recent years.

It was rumoured the consortium had eyed 26-32 King Street to preserve Rialto Towers view lines over the Yarra River.

The Rialto Towers owners were in the mix of prospective buyers for 26-32 King Street following the most recent marketing campaign.

Mr Baxter said the competitive marketing campaign fielded interest from other local buyers, as well as offshore groups.

“The scarcity of Melbourne CBD properties on the market, particularly below $20 million, is apparent among active buyers, resulting in significant pent-up demand,” Mr Baxter said. “The buyer was seeking to secure a prime CBD asset for long-term capital growth, and this sale demonstrates the strong market appetite for premium properties generating solid income”.

“The explosive growth occurring in the west end of the CBD has resulted in rapidly escalating land and capital values. Literally thousands of apartments plus hotel and office buildings are being built between William and Spencer streets” Mr Clinton said, adding that the population in this pocket of the city is set to surge.

Mr Li added that “despite recent media reports of a withdrawal of Chinese money from the Melbourne market, Savills is actually experiencing an uptick in capital from Asia seeking prime commercial assets”.

“We have Asia-based clients actively seeking all forms of CBD and inner metropolitan commercial assets,” the broker added.

Today we reported that Charter Hall had acquired 555 Collins Street, west of the Rialto Towers complex, for $140 million, following an off-market deal.

Charter Hall owns the neighbouring property, 55 King Street. It is now expected to build an office complex on this amalgamated 4620 sqm holding.

Marc Pallisco

A freelance property writer and analyst, Marc is a co-founder of realestatesource.com.au.

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