Who's buying the Melbourne revival story on a 1pc yield
Private developer V-Land is doubling down on its conviction in the revival of the Melbourne CBD, snapping up seven shops on a prominent city corner in a deal worth more than $50 million.
The deal was struck on a yield of about 1 per cent, a signal that the asset is worth more for its development potential than its current returns.
The sale of 157-173 Lonsdale Street, a group of seven properties sold in one line, is the most recent example of nimble private players who are ready to back their view that there is a brighter future in store for one of the country’s most battered CBDs.
The properties were previously bought by a private investor for $49. 2 million through a transaction that had settled at the end of 2019, just before the pandemic struck and a series of rolling lockdowns killed off the city’s small retail trade.
By April this year though, V-Leader was already investing into its belief there were better days to come, by opting to remove a 288-room hotel from its 40-storey tower plans and converting it to a $400 million-plus office-only project at 600 Lonsdale Street, in the city’s legal precinct.
The latest acquisition takes V-Leader’s portfolio into the ritzy east end of the CBD. The seven combined sites sit on a land parcel of 1137 square metres, with street frontage extending more than 100 metres.
“We’ve spent a considerable amount of time analysing the various options and given the sites proximity to an abundance of amenity, the location instils an opportunity for a variety of uses,” managing director Any Zhang said.
“We’re considering a mixed-use project with the exact outcome to be solidified over the coming months.”
A run of transactions over the past year show how private players are pouncing on opportunities for upside amid the disruption to the city market, such as the $37 million sale of the former Swinburne University campus at 226 Flinders Lane, the $29.6 million transaction of 170 Queen Street, and the $25.2 million deal for 175 Flinders Lane.
“There’s a large amount of capital from investors and developers wanting to take advantage of the limited supply of land in the CBD,” said Colliers Oliver Hay, who brokered the seven properties with colleagues Leon Ma, Daniel Wolman and Matt Stagg.
“Demand has flooded in from local, interstate and offshore groupsand created a competitive atmosphere amongst buyers seeking quality land parcels, with considerable opportunity waiting to be unlocked.”
