THE falling-out of two of Melbourne's biggest private developers will be played out publicly at the end of the month when agents auction a landmark city office building on court orders.
The imminent sale of the former Ansett headquarters at 501 Swanston Street, for a price expected to surpass $50 million, is also fascinating those within the real estate industry for being likely to smash the record price paid for a CBD office at auction.
Interestingly, each of the
co-owning vendors of the building, Vince Giuliano, head of PDG Corporation, and Mario Salvo, director of Salvo Property Group, is expected to bid for full control of the asset.
The consortium has recently developed apartments on land adjoining the 18-level, hexagonal building, which was re-leased to tenants after Ansett went into voluntary administration 10 years ago.
Renowned for its views, the building has great redevelopment potential, but has been retained by the owners as an investment. It is near a site in Carlton that in 2010 was earmarked to become a 90-level, 800-unit apartment building.
Densities in Melbourne have loosened even more since 2010, with 501 Swanston Street touted by some industry players as a possible site to accommodate Melbourne's first 100-level-plus building.
It is believed that after a recent dispute between the owners, the courts concluded that 501 Swanston Street be auctioned, despite agents arguing that an expressions of interest campaign may have been more appropriate.
Agents tell BusinessDay the highest-priced office building to sell under a gavel in recent memory was in 2007, when serviced-office operator Christie Corporate paid $17.8 million for an unrenovated 11-level office at 454 Collins Street.
An advertisement for 501 Swanston Street, not mentioning the address, is being circulated to potential buyers. The auction will be held at the Rialto boardroom of agency CBRE at midday on May 29. Mark Wizel, Martin O'Sullivan and Mark Coster are the marketing agents.
The Ansett portfolio purchase with PDG was Mr Salvo's first foray into major property development.
Mr Salvo had previously founded successful rental company Europcar, which was an owner-occupier in many of its inner-city showrooms.
New life for farm
THE owners of a 26-hectare Phillip Island farm, until three years ago owned by AMP Capital Investors and earmarked to become a retirement village, have applied to Bass Coast Shire Council to remove the entire aged-care component of the proposal.
The owner of the site paid AMP a reported $8 million for the Ventnor Road block and a permit for a 184-lot residential subdivision.
A major aged-care complex and community facilities were required to be developed as part of that permit. However, the council will now decide on whether to issue a new permit resulting in the entire farm, about three kilometres south-west of the centre of Cowes, being subdivided into 304 standard residential lots.
Blocks within the housing estate to be known as WhyteSands have been for sale since early last year.
It is competing for limited buyers with several new housing estates recently permitted for development in Cowes, including one controlled by Sydney giant FKP.
AMP originally planned to replace the farm with a 195-lot aged-care village but changed its mind after former health minister and now Attorney-General Nicola Roxon confirmed she would shut the island's only hospital, rather than honour a $2.5 million lifeline offered by the Howard government.
Around the corner
A LOCAL private investor has paid $10.75 million for a historic property at the
south-west tip of the CBD.
The former Sir Charles Hotham Hotel, later rebranded the Hotham Private Hotel, and now the All Nations Backpackers, occupies sites at 2-8 Spencer Street and
566-580 Flinders Street, near the Yarra River.
On an 833-square-metre site, the property has been offered for sale at various stages over the years, but a lease expiring in 2018 is believed to have deterred residential developers.
It is expected that the new owner of the property will use the time the asset is returning an income to propose a landmark residential redevelopment.
All Nations pays annual rent of about $885,586 to occupy the five-level art-deco building opposite Crown Casino. On that basis the sale price reflects a yield of about 8.2 per cent. Kliger Wood's Grant McKenzie and Russell Meerkin were the marketing agents.
River life
ANOTHER chunk of former industrial land in Kensington is on track to being replaced with apartments.
At 1-89 Hobsons Road, abutting the Maribyrnong River, and between the train line and Lynch's Bridge, five hectares of land belonging to six separate owners has been rezoned to allow for mixed-use redevelopment.
The land is diagonally opposite a 15-hectare Footscray parcel across the Maribyrnong River known as the Joseph Road precinct, which has recently been earmarked for intense apartment development.
The Kensington rezoning cites the former government's defunct Melbourne 2030 planning policy, which aimed to replace industrial sites near public transport with high-density housing.
Hobsons Road is near the South Kensington railway station and Kensington Banks housing estate, which was built on the site of an abattoir and army depot site in the 1990s. It is also close to Flemington Racecourse.
Fuelling expansion
A PORTFOLIO of four Freedom petrol stations in Gippsland has sold for $7.6 million to United Petroleum, which will be an owner-occupier.
The most expensive asset, a 1812-square-metre station overlooking Western Port in San Remo, South Gippsland, sold for $3.59 million. The other stations are in Churchill, Traralgon and Newborough.
In conjunction with these property sales, a 14-site retail network of Freedom Fuel stores also sold to United Petroleum for an undisclosed price.
The service stations in Gippsland, the Latrobe Valley, and in Melbourne's Burwood and Kew will also be rebranded, adding to almost 300 stations United operates nationally.
"Intervention by the ACCC, who were concerned about competition issues, delayed settlement by three to four months," selling agent Ron Newton of Ronald A Newton and Associates said.
Some deals took more than a year to finalise, he added.
$6.5m for water land
MELBOURNE Water can expect about $6.5 million from the sale of a development site on the corner of Colemans and Frankston-Dandenong roads in Dandenong South.
Being offered with vacant possession, the site is spread over 5.5 hectares and includes about 4000 square metres in building improvements. Knight Frank selling agents Martin Bourke, James Templeton and Adrian Garvey are marketing the site.
Last year Melbourne Water successfully rezoned two hectares of land abutting the Arthurs Seat State Park in Dromana in a move expected to see the site attract residential developers.
marcpallisco@gmail.com
Twitter: @marcpallisco
Frequently Asked Questions about this Article…
What is being auctioned at 501 Swanston Street (the former Ansett headquarters) and why does it matter to investors?
The 18-level, hexagonal former Ansett headquarters at 501 Swanston Street in Melbourne is being auctioned by court order. It’s significant because the building is a landmark CBD office with strong redevelopment potential, is expected to fetch more than $50 million, and could set a new record for the highest price paid for a CBD office at auction — all factors that make it of interest to property and commercial real estate investors.
When and where is the 501 Swanston Street auction taking place and who are the marketing agents?
The auction is scheduled for midday on May 29 in the Rialto boardroom of CBRE. The marketing agents handling the sale are Mark Wizel, Martin O'Sullivan and Mark Coster.
Who currently owns 501 Swanston Street and why could a bidding war happen?
Co-owning vendors are Vince Giuliano, head of PDG Corporation, and Mario Salvo, director of Salvo Property Group. After a falling-out between the owners, the courts ordered the property to be auctioned. Both co-owners are expected to bid for full control of the asset, so a competitive, possibly bitter bidding contest is likely.
What redevelopment potential does 501 Swanston Street have and could it support a very tall building?
Industry commentators highlight the site’s strong redevelopment upside. It sits near land that was previously earmarked for a 90-level, 800-unit tower and some players have suggested 501 Swanston Street could even be considered for Melbourne’s first 100-level-plus building, given loosened density rules since 2010. That potential is a key reason investors are watching the sale.
Why was the property taken to auction instead of being sold by expressions of interest?
A recent dispute between the owners led the courts to order the building be auctioned. Agents had argued an expressions-of-interest campaign might have been more appropriate, but the court decision overruled that and set an auction date.
How does this auction compare to previous CBD office auction sales?
Agents say the highest-priced office building sold under the hammer in recent memory was in 2007, when Christie Corporate paid $17.8 million for an unrenovated 11-level office at 454 Collins Street. With 501 Swanston Street expected to exceed $50 million, the sale could comfortably surpass that earlier auction benchmark.
Are there other notable property sales in the article that everyday investors should know about?
Yes. Highlights include: a 26-hectare Phillip Island farm marketed as the WhyteSands subdivision; the historic Sir Charles Hotham/All Nations Backpackers property sold for $10.75 million (generating about $885,586 pa in rent, a yield near 8.2%); a portfolio of four Freedom petrol stations sold to United Petroleum for $7.6 million (with the San Remo site alone at $3.59 million); and a Melbourne Water development site in Dandenong South expected to fetch about $6.5 million. These sales illustrate demand across residential subdivision, CBD redevelopment, service stations and strategic land.
What practical takeaways should everyday investors consider from these sales and the 501 Swanston Street auction?
Key takeaways: auctions can produce competitive pricing when ownership disputes or clear redevelopment potential exist; location and rezoning upside (proximity to transport, prior tall-tower proposals) materially affect value; income-producing assets (like the All Nations Backpackers) are often valued by yield; and regulatory or competition issues (for example ACCC intervention in petrol-station deals) can delay transactions. Investors should weigh current rental income against redevelopment upside, legal or planning risks, and the sale method (auction vs expressions of interest) when assessing opportunities.
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