Myer family sells St Kilda Road office for $77m

The Myer family has sold a seven-level office on Melbourne’s premier leafy boulevard St Kilda Road to acquisitive Singaporean Tong Eng Group for close to $77 million.

The deal, struck on a sharp 4.66 per cent passing yield, sets a new benchmark for the boulevard just as activity in Melbourne’s commercial property sector ramps up ahead of the year’s close.

The St Kilda Road deal follows another in neighbouring South Melbourne where a large development site at 68 Buckhurst Street changed hands for $61,888,888.

The 9356 square metre block had a development permit for a mixed-use project with 1004 apartments across four towers, but sold to a childcare operator rather than property developer.

The sale by the Myer family’s private investment vehicle of the Gateway office at 312 St Kilda Road puts buildings on the boulevard in the same yield orbit as CBD office markets in Sydney and Melbourne.

Halfway through this year Mirvac sold a 50 per cent stake in its signature Olderfleet building in Collins Street for $414 million to Singapore’s Suntec REIT on a tight 4.8 per cent yield.

A few months before that transaction Dexus acquired a half stake in Sydney’s MLC Centre for $720 million on an even sharper 4.5 per cent yield.

CBRE’s Kiran Pillai, Luke Etherington, Mark Wizel and Lewis Tong negotiated the Gateway’s sale to the private family office of Tong Eng Group’s managing director Teo Tong Lim.

The private arm of Tong Eng has been a particularly active Melbourne investor.

Two months ago it snapped up the Country Fire Authority’s headquarters in the Tally Ho business park in Burwood, in Melbourne’s east, for $18.08 million.

Late last year it gained control of an 11-storey tower at 5 Queens Road on the city fringe for $116.3 million.

The Buckhurst Street deal may see the new owner ditch the site’s valuable approved development plans which include 30 storey towers, a highly unusual move.

Savills’ Benson Zhou, Nick Peden and Jesse Radisich, in conjunction with Colliers International’s Bryson Cameron, Trent Hobart and Hamish Burgess, brokered the deal for vendor Botree Group.

The site was acquired by Little Lane Early Learning Centre which intends to build a super-charged childcare and education centre on the site.

“We will be lodging an application for childcare. The intention is to use it for a very high quality childcare, a training college and community support for early childhood education. It sits opposite the new vertical school,” Little Lane’s chief operating officer Shan Kuo said.

The group which operates 15 centres in Queensland and has another four planned in Melbourne will include facilities like an indoor swimming pool and rock climbing centre.

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