An investment partnership connected to high-profile developer Larry Kestelman is putting a permit-approved luxury St Kilda Road residential development on the market with expectations above $30 million.
Chinese-Australian investors Tim Chang and Michael Xie are selling a freehold site at 596 St Kilda Road through agents Colliers International after buying the property three years ago from Singapore based Lian Beng for $34 million.
The now empty site was formerly a low-level strata apartment block over which Lian Beng obtained a development permit for a Bates Smart designed 19 level residential tower with 101 apartments.
Colliers’ Daniel Wolman said the 1804 square metre permit-approved site was a “blank canvass” that would prove attractive to developers.
Over the past decade, the leafy St Kilda Road boulevard has undergone a transformation into an upmarket residential precinct favoured by wealthy owner occupiers.
“If you buy something today for a development that will take several years, it doesn’t matter what asset class, it’s going to be completed in a stronger market when the economy has recovered from the pandemic,” he said.
Mr Chang and Mr Xie’s investment in St Kilda Road has not been without hiccups.
Property records show a company controlling the site, 596 St Kilda Road Pty Ltd, was put into external administration under insolvency specialists Hall Chadwick for several months last year after encountering difficulties refinancing the property.
The title records show high-profile developer Larry Kestelman has a caveat over the property to cover a mortgage on the site, suggesting he helped refinance the property.
Mr Kestelman is behind the Capitol Grand, a glitzy $700 million high-rise in South Yarra.
He also has a caveat against another of Mr Chang and Mr Xie’s investment properties, 10 Queens Road, which the pair purchased from him in March last year for $59 million.
That caveat is also protecting Mr Kestleman’s mortgage on the property.
“It might not be the best time to sell,” Mr Xie said, voicing concern about the impact of COVID-19 on commercial property. “But we believe the office market and residential market is still strong despite the virus.”
Because of his Chinese-Australian background, Mr Xie said he had direct experience of the SARS pandemic and knew it was just a matter of time before the current virus was brought under control.
“We understand Australia will get through this tough time.”
St Kilda Road and its surrounds are proving attractive to investors despite the spread of coronavirus through the city.
Earlier this month, 71-73 Palmerston Crescent, a five-level office in trendy South Melbourne, sold off-market to a private syndicate for around $14 million.
A few weeks before that the Royal Australian and New Zealand College of Obstetricians and Gynaecologists exchanged contracts with investor Brendan Sullivan to take ownership of his seven-level office just off the boulevard in a deal understood to be worth $19.6 million.
In May, Flight Centre sold its 11-storey headquarters at 436 St Kilda Road for $62.15 million to Shakespeare Property Group, the property arm of investment manager Prime Value Asset Management.
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