For the second time in as many months, a private owner is intending to build one multi-level residence within the airspace of a commercial property in a popular inner-Melbourne retail strip.
The purchaser of the warehouse site at 298 Lygon Street in Brunswick East outmuscled several developers.
It is expected a high rise home could soar four levels, however the 420 square metre Commercial 1 zoned site could be allowed to make way for an 11-storey structure given local planning guidelines.
A warehouse on the site – at one time used as a blacksmith and saddlery – is built to the boundary and expected to form part of the redevelopment.
Last October, the owner of a vacant strip shop at 309 Barkly Street, Footscray, in the city’s west, applied to build an eight-bedroom family residence seven levels into the airspace.
The world’s most noteworthy multi-storey single home is, arguably, Antilia, which rises 27 storeys in South Mumbai, India.
Said to be the second most expensive residential dwelling after Buckingham Palace, Antilia, developed by billionaire, Mukesh Ambani, is estimated to be worth about US$2 billion.
Private home owners can afford to compete in the Melbourne development site sphere at the moment
Melbourne Acquisitions’ James Latos said he wasn’t surprised to see a private resident show interest in the Brunswick East site he was marketing, despite it being a clear medium-density development play.
The executive said land values for many suburbs between five and 10 kilometres of the city still haven’t caught up to their prior peaks – as apartment developers shied away from the sector for fear of it becoming oversupplied.
As such, private ‘high-rise-home’ owners, like the one which acquired 298 Lygon Street, are competing in the development site sphere at an opportune time.
The outcome for the Brunswick East property, Mr Latos said, will be one of the suburb’s most expensive homes: a landmark and high-character, warehouse-extended-dwelling, in the heart of one of the suburb’s most popular retail strips.
It will also likely be larger than anything the owner could have created in a residential zoned street within the suburb, include basement car parking and a rooftop garden, the broker added.
The incoming 298 Lygon Street owner also has the opportunity to create commercial components within the redevelopment to retain as an investment.
Subdividing and selling off these portions, Mr Latos added, would reduce the effective cost of the high-rise-home considerably.
Mr Latos marketed the Brunswick East holding with Dominic Gibson.
Couldn’t be done nearly as cheaply, one suburb in…
Mr Latos said average land values in Brunswick East, six kilometres north east of the city, are substantially less those just one suburb closer to the city (incorporating Carlton North and Fitzroy North).
Though the agent isn’t quoting the sale price of 298 Lygon Street, it was expected upon listing to sell for about $1.8-$2 million.
This compares with a c$8 million price attached to a similarly sized (417 sqm) warehouse development site which traded late last year in Collingwood, a suburb three kilometres from the city.
Mr Latos said a home owner can consider building a landmark residence with less than $4.5 million in the belt of suburbs lined up with Brunswick East geographically – including Brunswick, Northcote, Thornbury, Fairfield and Alphington.
These suburbs also still provide large commercial development opportunities where a warehouse-extended-residences can still be entertained by a private home owner, at a price which many may consider won’t break the bank.
Thing of the future? Maybe only for the super-wealthy
Sadly, Mr Latos doesn’t think high-rise homes will be within reach of most inner-city residents for long.
The broker said a marked shift in demand for inner-city homes this quarter is fuelling interest from developers for sites
Values in suburbs between five and 10 kilometres from the city, are starting to rise and are expected to continue to, next year, the broker said – adding that Commercial 1 zoned building blocks will become rarer as more of it is replaced.
Coupled with a return in demand for medium density product, Mr Latos said many private home buyers who have been active in Melbourne’s inner-city development site market this year, will be priced out before too long.
The agent expects commercial properties with development upside in suburbs further north of Brunswick East, including Coburg, Preston, and Heidelberg West, to start appearing on the radar of home buyers, over coming years.