Developer buys centrally

Two properties in Melbourne's legal precinct have been sold for more than $20 million to developer Central Equity.

The two-storey buildings at 556-566 Lonsdale Street and 13-25 Healeys Lane were the first major central business district development site worth more than $10 million to sell to a local, rather than offshore-based, developer this year. Offshore interests have dominated development-site sales in Melbourne's CBD in 2013, snapping up eight major holdings with a combined value of $183,400,000.

The two Lonsdale Street buildings have a total site area of 2173 square metres and stretch along Healeys Lane, a popular dining area for nearby office workers.

They are currently leased to multiple retail and office tenants, but Central Equity is expected to demolish and build a residential development in their place, although no permits have been issued.

The sale represents a significant shift of potential residential construction in Lonsdale Street towards the city's centre.

Melbourne's western end is undergoing a major transformation, with Hong Kong-based Far East Consortium recently paying $10 million to buy the Citywide Service Solutions building next door to its mammoth Upper West Side apartment complex located between Spencer and King streets.

Central Equity is one of Melbourne's largest developers. It generally shuns publicity but has a substantial development portfolio in Southbank, where it completes an estimated 1500 apartments a year.

The sale was part of an emerging trend where development sites are being transacted without planning permits, said CBRE director Mark Wizel, who handled the sale in conjunction with Gross Waddell agent Andrew Waddell.

"It's really demonstrating the overall strength of the CBD as an apartment market," Mr Wizel said.

Central Equity has two major towers under construction in Southbank - Grand and EPIC - and is building a third in West Melbourne called Flagstaff Place.

Central Equity director Karl Kutner said the purchase of a CBD development site was not a shift in focus for the company.

"We've got other development sites in the city under construction. We're just continuing on with what we're doing," he said.

Mr Kutner would not be drawn on a development timetable or company plans for the site.

Central Equity also has land lot holdings and development interests at Point Cook, Mernda and Truganina.