Investors snap up city sites

Land values in Melbourne's city centre continue to soar as competition intensifies among offshore investors for a dwindling number of prime development sites.

Land values in Melbourne's city centre continue to soar as competition intensifies among offshore investors for a dwindling number of prime development sites.

Local investor Jimmy Goh has sealed a $17 million deal for the final property in a three-asset portfolio he first offered to the market in May. Private Chinese developer Chris Jian swooped on the single-storey warehouse at 229-241 Franklin Street.

The deals were brokered by CBRE agents Mark Wizel and Josh Rutman, in conjunction with Colliers agents John Marasco and Matthew Stagg.

The 1498-square-metre Franklin Street site - opposite the Queen Victoria Market car park, which itself is due for a multimillion-dollar revamp - was brought by Mr Goh in 2008 for $6.5 million.

Mr Goh's other two sites - a multi-storey car park on La Trobe Street and an open-air car park in Mackenzie Street - were snapped up by Malaysian property giant UEM Sunrise in August for a combined total of $65.65 million, demonstrating the large offshore appetite for city assets.

Mr Goh bought all three sites at the northern end of the city between 2008 and 2012 for a total of $47.425 million.

None had development permits but all have the potential for high-rise apartments.

The Franklin Street transaction follows Shanghai-born developer Jeff Xu last month sealing a private off-market purchase of the Drummond Golf store site on the corner of Elizabeth and Franklin streets for a reported $18 million. Records show a company connected with the Shafir family paid $2.9 million for the property in 1990.

Mr Xu would not comment on the land sale but said his Golden Age Development Group had submitted plans to build a 75-level apartment block called Victoria Tower at 452-472 Elizabeth Street. The green and gold skyscraper will hold about 600 apartments and, if approved, will be the second-tallest residential building in the city.

Mr Wizel said about $810 million of Melbourne city development sites had traded to Asian interests since early 2010.

Raw land prices have surged 46 per cent since 2010 for sites larger than 1000 square metres, with the average price of CBD land about $11,280 per square metre, he said.

Analysts Charter Keck Cramer say offshore developers will be building about half of all apartment projects in the CBD by the end of the next financial year. They said the market share of offshore-driven projects would double by 2014-15 after more than doubling in the past two years.