RISING TREND AS ASIAN INVESTORS CASH IN CHIPS

Written on the 23 December 2015 by Nick Nichols

RISING TREND AS ASIAN INVESTORS CASH IN CHIPS

LISTED Singaporean developer Hiap Hoe has had no trouble finding a buyer for the former Village City Centre in Melbourne, bagging a $10 million profit on the property in just two years.

The 206 Bourke Street property has been sold for $116.28 million to super fund investor ISPT.

Hiap Hoe decided to sell the mixed-use property, which spans across to Little Bourke Street in the city's Chinatown precinct, after abandoning plans for a hotel development on the site.

It had bought the property from developer Les Smith and finance house Qualitas for $105 million in 2013.

"Hiap Hoe has taken the opportunity to capitalise on the buoyant market conditions for Melbourne CBD retail assets," says CBRE's Mark Wizel, who was part of the CBRE and Savills team that negotiated the deal.

"Yields for prime assets are continuing to tighten due to a number of factors, including the cheaper cost of debt funding and the overall shortage of investment grade assets being offered for sale in all of the major Australian capital cities."

Hiap Hoe had bought the property on a yield of more than 7 per cent. The latest sale to ISPT has been struck on a yield of 5.5 per cent.

Hiap Hoe had bought the property with approvals for a six-storey hotel to be built atop the existing office-retail tower.

Despite sales success from its existing Marina Apartments project at Docklands, it decided to cash in its chips at Bourke Street in September. It has sold all of the 461 units in the $270 million twin-tower Marina Apartments which will include a Four Points @ Sheraton hotel.

However, Hiap Hoe suffered a reversal of fortunes over the past nine months after posting a $S12.7 million ($A12.5 million) loss for the period to the end of September. The result was driven by soft conditions in the Singapore market.

The company was advised by law firm Maddocks on the sale of the Bourke Street property, and the deal is among a number of significant transactions in the Melbourne CBD by Asian investors who have started taking profits from the market.

"We are acting for a large number of inbound investors from China, Singapore and Malaysia who are increasingly taking advantage of opportunities in the market to sell prized CBD assets with the green light to be developed rather than doing the developing themselves," says  Nick Holuigue, Maddocks partner and head of the development practice team.

"The sale by Hiap Hoe of 206 Bourke Street and the sale by Singapore-based Aspial Corporation, the developer of Australia 108, of 383 King Street to Haileybury College are prime examples this year of this trend.

"Our experience in this field tells us that this approach by inbound investors will continue in 2016."

 

Business News Melbourne


Author: Nick Nichols

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