Investor set to double his money on three sites

A wealthy property investor who is selling three prime city development sites may nearly double his initial $47 million investment.

A dwindling supply of prime sites in Melbourne's central business district and strong interest from big offshore, mainly Asian, developers has fuelled a rapid rise in city land prices.

Businessman Jimmy Goh purchased the three sites - 9-23 Mackenzie, 224-250 La Trobe and 229-241 Franklin Street, all in the northern end of the city - for a combined total of $47,425,000 between 2008 and 2012.

Their sale, by Colliers International's John Marasco and CBRE's Mark Wizel, is expected to fetch up to $80 million.

Melbourne's skyline has been transformed by a surge in apartment towers over the past decade - the result of strong population growth, a shift to inner-city living and overseas students. About 25,500 units are expected to be completed in the metro area by the end of next year.

Most of the city's largest high-rise projects are being built and sold by Asian developers, who have filled a gap in the market after Australia's banks tightened finance restrictions on local developers following the global financial crisis.

However, none of these sites is being sold with a development permit.

"It's such a large offering it might attract new offshore developers to Melbourne," Thomsons property lawyer Eu Ming Lim said. "It's seldom that you get three development sites in one hit."

But there are concerns speculators are buying sites, applying for planning permits and on-selling at substantial mark-ups.

Planning Minister Matthew Guy has approved 50 residential towers since coming to office in 2010.

And it is not only offshore interests benefiting from the boom. Melbourne developer and publisher Morry Schwartz purchased a site next door to Mr Goh's Mackenzie Street property in 2008 for $10.5 million. Two years later it sold with a permit to Singaporean developer Chip Eng Seng for $20.2 million.