AMP Capital has beaten local and offshore private investors and international hoteliers to buy back the building it developed in 1931 to house its Melbourne operations.
The 425 Collins Street building was acquired for $39 million from the Indonesian-based
CBRE’s Kiran Pillai, Mark Wizel and Josh Rutman handled the international Expressions of
Interest campaign for the high profile, 10-level office and retail building.
The sale reflects a passing yield of 5.07% and a building rate of $7,250/sqm. It adds to
a string of strong results recently recorded in Melbourne’s ‘mid-town’ precinct.
“The location and the flexibility of the asset were the key trigger points for the majority of interested parties. As quality opportunities are becoming harder to uncover in the traditional $100m+ space, institutional capital is starting to gravitate to prime assets in this lower price bracket, which is creating an unparalleled level of competition and driving prices to levels we have never experienced in Collins Street,” Mr Pillai said.
Mr Rutman added; “Over $3 billion worth of office, retail and residential development is
either planned or underway in Melbourne’s mid-town and Cbus’s proposed $1
billion redevelopment of 447 Collins Street is directly opposite. It’s a rapidly changing
landscape and buyers are aggressively pricing assets that offer them exposure to this
exciting part of town.”
The property has been acquired by AMP’s Wholesale Australian Property Fund, which has
been one of the most active domestic funds in the market of late, having recently
exchanged on the Stud Park Shopping centre in Rowville for $154 million.
CBRE’s Mark Wizel said the 425 Collins Street campaign had generated interest from an extremely diverse range of buyers, with particularly strong interest from Chinese and Singaporean hoteliers looking at a future conversion of the asset.
“The building’s high profile corner position in a developing location, in addition to
extensive on site car parking, provided the ideal ingredients for these offshore hoteliers,
who are one of the most aggressive buyer groups we’re dealing with at present,” Mr Wizel said.
“Anything with presence and an income position which allows for future redevelopment is
attracting incredibly strong interest at the moment, especially given the recent changes to the planning scheme in the CBD, which has created an element of uncertainty for these
Designed by Bates, Smart and McCutcheon, the heritage-listed 425 Collins Street has a lettable area of 5,350sqm. It provides a diversified income from the office and retail space, which includes a bar and restaurant.
The sale follows on for a series of major transactions to have been concluded on the premier Collins Street thoroughfare this year. These include 52 Collins Street, 410 Collins Street, 446 Collins Street, 415 Collins Street and 520 Collins Street – reinforcing the investment appetite for prime grade commercial real estate in the Melbourne CBD.