Probuild founder Phil Mehrten has lifted the value of his Melbourne suburban divestments this year to more than $30 million after selling the former Prahran post office to a local Chinese family for $13.38 million.
The three-level, renovated retail and office building at 168 Greville Street, in one of Melbourne’s fashionable inner suburbs, sold on a tight yield of 4.5 per cent.
Amid a surge of capital into suburban commercial real estate, Mr Mehrten has taken advantage of the heady appetite to sell three assets since May.
The first of these divestments, a modern office building in Hawthorn (which he owned with former AFL St Kilda player Wayne Judson and fellow Probuild director Edward Yencken) smashed expectations of more than $9 million when it sold at auction in May for $15 million on a yield of just 3.2 per cent.
“I don’t think anyone could have predicted the level of competition that we saw today or the eventual price,” said Mr Mehrten after selling the Hawthorn property.
Earlier in October, he sold a 438sq m shop on Small Street in affluent Hampton Village to a Chinese buyer for $3.6 million, also on a 3.2 per cent yield.
Spike in demand
The price paid for the former Prahran Post Office was almost 50 per cent more than it last traded for in 2013.
CBRE’s Kevin Tong, who marketed the Greville Street property with Mark Wizel, Rorey James and Julian White, said its Asian services desk had witnessed the resurgence of Chinese investors first hand, with Asian buyers accounting for 19 of the team’s 27 sales in the past nine weeks.
“We have seen a spike in demand for Melbourne properties, with the recent fall in the Australian dollar having had a positive impact on Chinese buyer confidence in commercial property acquisition,” Mr Tong said.
Occupying a 734 square metre site on the corner of Greville and Macquarie Streets, the former post office was fully restored in 2010. It is leased to tenants including the Angus & Bon steakhouse, GoPro and the College of Intensive Care Medicine, which anchors the building.
“Our vendor was aware of the incredible yield compression for this style of investment in Melbourne, with the eventual sale price being more than 250 basis points sharper than when the building last traded in 2013 for $9.1 million,” Mr Tong said.
Mr Mehrten struck gold three years ago when he sold a three-level office building at 415-417 Collins Street in the CBD to Melbourne investor Tao Shen for a bumper $8,888,888, $2.5 million above the reserve on a yield of 2.2 per cent.
