Developer plans $590m tower on site formerly owned by Bruce Mathieson
Developer Sterling Global has set out ambitious plans for a $590 million, 42-storey mixed tower on a prominent Collins Street corner that it acquired from hotels billionaire Bruce Mathieson – seven years after its last big city-shaping project in the Melbourne CBD fell through.
Last month, Sterling Global secured a permit for its 623 Collins project, which covers 2000 square metres across three titles. The project includes 2700 square metres of office space and a ground-floor restaurant in the 1924 State Savings Bank of Victoria building, as well as retail space, a hotel and 320 apartments in the tower above the adjacent Batman’s Hill Hotel building.
It’s the second time around for the privately owned developer, which in 2016 hired Pritzker Prize-winning French architect Jean Nouvel to design a 70-level tower on the 383 La Trobe Street site that at the time housed the Australian Federal Police’s Melbourne office.
But that project did not go ahead because the AFP exercised its rights to remain in the building. Sterling Global sold the site to ASX-listed Mirvac two years later for $122 million.
It kept looking for another CBD site and acquired the land, majority-owned by the Mathieson family, in a deal that settled in 2023 for $55 million – along with an undisclosed additional payment for the hotel business that it has kept operating since then, according to Sterling Global development director Brandon Yeoh.
“We had been looking at this site for a while,” he said. “We started looking in 2017, from memory. We had early discussions that didn’t go anywhere, and we shelved it.
“It picked up again, and we finally acquired it at a time when hotel guest assets were a bit under pressure. The tourism sector was under pressure.”
New housing development has picked up, driven by rising sales prices and lower borrowing costs, at a time when building costs have largely stabilised after years of soaring inflation. Housing starts jumped nearly 12 per cent in the March quarter to a seasonally adjusted 47,645, the latest official figures show.
Demand is strongest for luxury apartments aimed at wealthier downsizers, who can afford to pay prices that make the projects profitable for developers. Sterling Global’s average selling rate of $19,000 per square metre puts it solidly in that market niche.
There will be a range of apartments in the Plus Studio-designed development. Yeoh said most would be priced below $2 million, the six sub-penthouses would sell for about $5 million, and the 400-square-metre penthouse would have a price tag of about $13 million.
Facilities for residents will include a pool, an outdoor terrace, private dining spaces and a wellbeing retreat with a sauna, spa, steam room and cold plunge. The interior designer is Fiona Lynch.
The end value of the residential component would be about $530 million, and the office and hotel space would make up the remaining $60 million, Yeoh said.
Bruce Mathieson Jr, the billionaire’s son who runs the family business, said the site on the corner of Collins and Spencer Streets lent itself to the plans.
“That property always had that potential,” Mathieson said. “I think it’s great. It’s a vision. It’s a big vision.”
But Sterling Global, which has developed smaller projects since the La Trobe Street project fell through – such as the 39-apartment Como Terraces in South Yarra and the 12-unit Heyington in Toorak – has to show it can make the development on the 2000-square-metre site happen.
Yeoh said it had received more than 200 expressions of interest from potential customers, who had paid a refundable deposit of $2500 to be in the queue to choose an apartment, and it would appoint a builder in the next six weeks.
Sterling Global expects to start the 42-month construction program in March next year, with completion scheduled for late 2029.
Yeoh said the company was talking “mostly” to non-bank lenders to secure construction funding.
“Given the lack of activity in the CBD, we’ve had very strong interest from parties on construction funding,” he said. “For the right project, it’s not hard to get construction funding.”
He said it had been a “very hard” decision to sell the 383 La Trobe Street building rather than holding on to it until the AFP vacated.
“AFP had a lease that was indefinite, and that made plans very difficult,” he said. “We understood the risk, so it was not a surprise. Still, we took on that risk. It didn’t pay off in terms of getting the project off the ground, but from a financial perspective, it was very successful.”
