Savills sells Melbourne CBD office building to Chinese investor

A five-level Melbourne CBD office and retail building has sold for $11.98 million to a Chinese investor who beat out several local and off-shore groups.

Savills Australia’s Clinton Baxter, Ming Li and Jesse Radisich negotiated the deal for 26-32 King Street on a tight yield of 2.9 per cent on behalf of a local private investor. 

“The scarcity of Melbourne CBD properties on the market, particularly below $20 million, is apparent among active buyers, resulting in significant pent-up demand,” Mr Baxter said.

The property, a retail and office building of about 1,200 sqm, on a landholding of about 304 sqm, is leased to multiple tenants, including a 7-Eleven on the ground level, and returns a net rental of $352,000 per annum.

“The buyer was seeking to secure a prime CBD asset for long-term capital growth, and this sale demonstrates the strong market appetite for premium properties generating solid income within the CBD,” Mr Baxter said.

The property last traded for $5.1million at a Savills auction in 2010, and has grown in value by 135 per cent over just eight years.

Mr Li said that despite recent media reports of a withdrawal of Chinese money from the Melbourne market, Savills was “actually experiencing an uptick in capital from Asia seeking prime commercial assets”.

“We have Asia-based clients actively seeking all forms of CBD and inner-metropolitan commercial assets,” he said.

The Australian Financial Review reported Rialto Tower co-owner Lorenz Grollo was an underbidder.

The property is across the road from the Rialto tower.