Melbourne Club trumped as neighbouring buildings fetch $22.35 million, more than twice the expectation

EXCLUSIVE

At an extraordinary boardroom auction yesterday contested by some of Victoria’s wealthiest private investors and the prestigious Melbourne Club, two adjoining Little Collins Street buildings (outlined, top) sold for $22.35 million.

The Melbourne CBD properties carried price hopes totalling about $10 million when Colliers International’s Oliver Hay, Daniel Wolman, Chris Ling and David Sia, listed them as separate offerings six weeks ago.

They traded to the one buyer – Melbourne businessman Rob Phillpot, who in 2017 offloaded the Aconex construction technology company he co-founded with a Scotch College schoolmate to US-based Oracle for $1.6 billion.

Last year, Mr Phillpot acquired two penthouses within St Kilda’s former Gatwick Hotel, which had just been re-purposed as an apartment complex as part of TV show The Block.

A redevelopment scheme building into the airspace of 37 and 39-41 Little Collins Street was promoted as part of the Colliers International campaign. The neighbouring Melbourne Club noticed.

In the largest deal, yesterday, 39-41 Little Collins Street exchanged for $16.5 million.

Quoted at $6.5 million-plus, the opening bid of $8 million immediately put the asset on the market. It sold after a staggering run of 99 offers – some increasing the value by as much as $500,000.

Australia’s honorary consul to Monaco, Andrew Cannon, who sold a strip of South Melbourne shops for $27.5 million four years ago, was one of the suitors.

The men-only Melbourne Club, which is based next door, also bid, via veteran real estate agent Bill Shelton.

The Melbourne Club was outed about its intention to buy in this item in The Age on Tuesday. However a linked price of $15 million – $8.5 million over the guide – failed to spook rivals from contesting against the establishment on auction day.

The view from 39-41 Little Collins Street into Melbourne Club’s courtyard garden.

Colliers International made no secret in marketing this property that Melbourne Club’s privacy was at risk – even publishing a photo in its advertisements of the upper-level view, directly into the neighbour’s courtyard garden with famous plane tree (above).

Bistro Lupino rents the ground floor of the three-level 39-41 Little Collins Street building. With 511 square metres of lettable area, the 220 sqm block is at the south-east corner of Ridgeway Place.

The sale price reflects a 1.1 per cent yield.

Following this auction, the neighbouring property at 37 Little Collins Street was put to buyers.

37 Little Collins Street sold for $5.85 million.

Quoted at $3.5 million-plus, it was also on the market with its first offer ($3.6 million).

Sixty six bids later – another runaway auction – the 175 sqm building traded for $5.85 million. This sale price reflects a 2.2 per cent passing yield.

The blended yield for the two assets – owned by the same family for 56 years – was 1.4 per cent.

The acquisitions give the purchaser control of 347 sqm of land in what agents consider to be one of the most valuable pockets of the city.

It is not the first time Colliers International has managed a demanding sale under the hammer.

Last April Mr Wolman ran what is believed to be the longest Victorian property auction in history resulting in 220 Bourke Street selling for $15.2 million. Attracting 661 bids over two hours and 15 minutes, the final result was well over the $9.5 million starting offer.

Bistro Lupino rents the ground floor of 39-41 Little Collins Street.

Of the Little Collins Street campaign, Mr Wolman said the backdrop of low interest rates (which coincidentally the Reserve Bank of Australia dropped by a further 0.25 per cent on Tuesday), and Liberal federal election win, contributed to the high enquiry level.

“It was good to see so many heavy-hitters competing” the broker said, without elaborating who they were.

Mr Hay added that the boardroom auction attracted a record number of people for the agency’s Melbourne office.

“What was witnessed on Friday afternoon was a perfect storm of market conditions and the most transparent display of the true demand for well positioned CBD assets,” Mr Hay said. “What is driving this are a number of factors however the strongest is a shortage of supply in quality Melbourne real estate”.

“The Colliers International City Sales team has been left with a large volume of unsatisfied capital that is looking to be placed in similar CBD assets”.

Another artist’s impression of a refurbished and extended 37 and 39-41 Little Collins Street.

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Marc Pallisco

Marc Pallisco

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

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