CEL Australia buys office building for $45m

The Australian subsidiary of a large Singaporean property developer has bought a 12-level office building in St Kilda Road for $45.28 million.

CEL Australia, an offshoot of Singapore-listed Chip Eng Seng, sealed the deal this week for the large, mirror-clad building on the corner of Kings Way and St Kilda Road.

The transaction caps a flurry of sales to offshore developers this year.

Earlier this year, CEL inked a deal to buy a prime development site, at 170 Victoria Street, from Melbourne-based developer Grocon for $32 million. It intends to build up to 1000 apartments on the land, part of the former Carlton & United Brewery site.

Late last year it gained planning approval for a 71-storey skyscraper on the corner of Bourke and Queen streets called Tower Melbourne, which caused controversy over its height when it was first mooted.

"CEL are obviously investing in Melbourne. We're very happy to build and reinvest here. We're certainly here in Melbourne for the long term," the group's Tim Pearce said. He would not be drawn on further details of the purchase.

CEL Australia uses space on level nine of 420 St Kilda Road, the building it purchased, as the headquarters for its small team of Australian staff. It is expected it will use a larger portion of the office to establish a permanent corporate presence in Australia.

Other tenants in the 10,528-square-metre building include an ANZ Business Centre, Intergraph Corporation, Harris Scarfe and Technology One.

The sale was negotiated between Savills Australia's Clinton Baxter and Thomsons Lawyers partner Eu Ming Lim acting on behalf of the vendor Queen Central Pty Ltd.

The price represented a strong initial yield of 8.1 per cent net, and a building rate of $4300 a metre, Mr Baxter said.

CEL is part of a large wave of offshore players looking to expand in Melbourne's apartment and office market. "In the past six months Savills has sold $343 million worth of Melbourne commercial properties, with only $32 million worth selling to local buyers," Mr Baxter said.