Significant Decline in St Kilda Property Values Amid Economic Challenges
Recent transactions reveal sharp discounts in real estate prices within the St Kilda Road precinct, as the area grapples with high vacancy rates and financial struggles among developers.
The St Kilda Road office market is experiencing a marked decline, with recent transactions highlighting the challenges faced by property owners and investors in the area.
Notably, a 19-storey office tower at 10 Queens Road has been sold for approximately $29 million, significantly lower than the $59 million price tag it fetched in 2019 from prominent investor Larry Kestelman.
The buyer, Alta Property Partners, has acquired the property from a subsidiary of Everland Global, which went into liquidation last year with debts of around $60 million.
The Queens Road tower, located on a 2,300-square-metre site overlooking Albert Park Lake, had initially been listed for around $50 million in 2023, but saw its price drop to the low $30 million range before the sale.
At least 12 potential bidders reportedly expressed interest in the property during the sale process.
The transaction was facilitated by agents from Cushman & Wakefield and Colliers, who have not commented on the deal.
Currently, vacancy rates in the St Kilda Road precinct are nearing 30%, according to the latest report from the Property Council of Australia.
The area's property values have declined steeply, especially among investors who purchased during the pre-COVID boom and are now facing challenges in selling at favorable prices.
Alongside Queens Road, there is speculation that many office buildings may be converted for residential use as demand shifts.
Historically, Everland Global had also acquired an art deco apartment complex at 596 St Kilda Road for $34 million in 2017, which it later sold for $25 million in 2020. This complex has recently been listed again, with hopes of selling for high $20 million.
Other recent sales in the area include Australian Unity’s office at 468 St Kilda Road, sold for $42.55 million, although its book value was $63 million.
Another notable transaction involved the purchase of No. 432 St Kilda Road by developer John Marro for $28 million, a property previously purchased for $41.6 million in 2014.
The Mars Group has re-listed its 10-storey building at 420 St Kilda Road for around $50 million, after initially acquiring it for $98 million in 2019. The building is currently 80% leased, generating approximately $6 million annually, with an average lease term of 2.5 years.
The initial listing for $85 million in 2023 received no substantial interest.
Reports released by various administrators and liquidators illustrate the dire situation of Everland Global.
Director Michael Xie indicated that the company ceased operations in May 2023, citing COVID-19 and a lack of investor funding for its inability to sustain cash flow.
The company's secured creditors, including individuals from Taiwan, claim substantial loans extended to Everland Queens Road, the entity that owned the aforementioned tower.
In other local real estate news, property developer Morry Schwartz has abandoned plans to construct a headquarters on the site of the former British Crown Hotel, stating difficulties in obtaining the necessary permits for development.
Schwartz had purchased the site in 2019 for $5.66 million and is listing it with an expectation of around $5 million.
Additionally, the former St Kilda location of Editel’s media production house is on the market.
Established behind a Victorian villa, the post-production facility includes multiple editing suites and recording studios.
This property is expected to attract offers around $10 million as Editel relocates.
Among various listings, a former hotel in the historical Little Lon red-light district is for sale, having been renovated with a combination of office space and residential accommodation.
The betting price for this property ranges between $4 million and $4.4 million, according to agents handling the deal.
Notably, a 19-storey office tower at 10 Queens Road has been sold for approximately $29 million, significantly lower than the $59 million price tag it fetched in 2019 from prominent investor Larry Kestelman.
The buyer, Alta Property Partners, has acquired the property from a subsidiary of Everland Global, which went into liquidation last year with debts of around $60 million.
The Queens Road tower, located on a 2,300-square-metre site overlooking Albert Park Lake, had initially been listed for around $50 million in 2023, but saw its price drop to the low $30 million range before the sale.
At least 12 potential bidders reportedly expressed interest in the property during the sale process.
The transaction was facilitated by agents from Cushman & Wakefield and Colliers, who have not commented on the deal.
Currently, vacancy rates in the St Kilda Road precinct are nearing 30%, according to the latest report from the Property Council of Australia.
The area's property values have declined steeply, especially among investors who purchased during the pre-COVID boom and are now facing challenges in selling at favorable prices.
Alongside Queens Road, there is speculation that many office buildings may be converted for residential use as demand shifts.
Historically, Everland Global had also acquired an art deco apartment complex at 596 St Kilda Road for $34 million in 2017, which it later sold for $25 million in 2020. This complex has recently been listed again, with hopes of selling for high $20 million.
Other recent sales in the area include Australian Unity’s office at 468 St Kilda Road, sold for $42.55 million, although its book value was $63 million.
Another notable transaction involved the purchase of No. 432 St Kilda Road by developer John Marro for $28 million, a property previously purchased for $41.6 million in 2014.
The Mars Group has re-listed its 10-storey building at 420 St Kilda Road for around $50 million, after initially acquiring it for $98 million in 2019. The building is currently 80% leased, generating approximately $6 million annually, with an average lease term of 2.5 years.
The initial listing for $85 million in 2023 received no substantial interest.
Reports released by various administrators and liquidators illustrate the dire situation of Everland Global.
Director Michael Xie indicated that the company ceased operations in May 2023, citing COVID-19 and a lack of investor funding for its inability to sustain cash flow.
The company's secured creditors, including individuals from Taiwan, claim substantial loans extended to Everland Queens Road, the entity that owned the aforementioned tower.
In other local real estate news, property developer Morry Schwartz has abandoned plans to construct a headquarters on the site of the former British Crown Hotel, stating difficulties in obtaining the necessary permits for development.
Schwartz had purchased the site in 2019 for $5.66 million and is listing it with an expectation of around $5 million.
Additionally, the former St Kilda location of Editel’s media production house is on the market.
Established behind a Victorian villa, the post-production facility includes multiple editing suites and recording studios.
This property is expected to attract offers around $10 million as Editel relocates.
Among various listings, a former hotel in the historical Little Lon red-light district is for sale, having been renovated with a combination of office space and residential accommodation.
The betting price for this property ranges between $4 million and $4.4 million, according to agents handling the deal.
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