Hong Kong family pays Salta Properties c$30 million for Dulux HQ in Clayton

A Hong Kong based family has made its first foray into the Australian commercial property market, paying Salta Properties about $30 million for a contemporary office in Melbourne’s south east.

The distinctive Dulux headquarters, at 1948-1962 Princes Highway, Clayton (pictured, top and below), attracted six offers – despite the possibility it could be vacated soon.

On the south east corner of McNaughton Road, the four-storey building contains 5732 square metres of lettable area and 230 car parks, most within a double-storey basement.

It occupies an approximate 7772 sqm plot near the IKEA-anchored Springvale Homemaker Centre and the Schiavello family’s $1 billion MCity office, residential and entertainment development, which is under construction.

The Clayton office, which could be vacated in 2022, sold for about $5 million more than expected.

Salta Properties purpose built the Clayton office for Orica Australia (which owned Dulux) in 2007.

The paint producer is currently the subject of a takeover bid from Japanese rival, Nippon – putting a question mark on whether Dulux will stay on after its lease expires in 2022.

When the office hit the market four months ago, it carried c$25 million price hopes.

The tender campaign, handled by CBRE Melbourne Middle Markets’ Scott Orchard, Josh Rutman and Lewis Tong, attracted interest from local, interstate and offshore private investors and syndicates.

The speculated sale price translates to a passing yield of about 6 per cent.

“Despite some concerns about the amount of new supply in Melbourne’s south eastern corridor, we received six tenders, with representation from South and West Australia, as well as Queensland and New South Wales,” Mr Orchard said.

“The appetite for sub $100 million office investments in Melbourne is at fever pitch, across all geographies, and this is having a major impact on pricing as very few quality assets have come to market in 2019,” the executive added. “Proactive owners are taking full advantage of this trend and are looking to take their properties to market before year’s end”.

Sam Tarascio Junior (front) with Salta Properties founder Sam Tarascio Senior.

Mr Orchard said the relatively short remaining lease term deterred some prospective buyers.

“But others were extremely confident in the broader office market and the ability to continue to attract strong tenants to the building,” he added.

The property is within the Monash Employment and Innovation Cluster – Melbourne’s largest concentration of jobs outside of the CBD – with some 75,000 roles contributing about $9.4 billion per annum to the Victorian economy.

Mr Tong said the Clayton sale demonstrated the growing trend of Asian capital gravitating towards income producing assets

Fifty five per cent of all Melbourne metropolitan offices this year have been purchased by either mainland Chinese, Hong Kong, Singaporean or Malaysian interests, the broker said.

Close to $500 million has been spent by this group in Melbourne’s CBD and inner-city over the past 12 months.

“International and domestic investors are telling us that they are looking for quality office assets that they can hold with confidence for the medium to long term, as they are looking to benefit from Melbourne’s rental growth story”.

Salta Properties, established by Sam Tarascio Senior, and now run by his son, Sam Junior (both pictured, above), develops and invests in commercial and residential property.

Artist’s impression of Industry Lanes, which Salta Properties and Abacus Property Group are constructing on a speculative basis at 459-471 Church Street, Richmond.

Earlier this week it started the speculative construction of Industry Lanes at 459-471 Church Street, Richmond (artist’s impression, above), a two-building office complex proposed in partnership with Abacus Property Group.

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Marc Pallisco

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