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Sale to see towers rise over South Yarra

PHOTOGRAPHIC distributor C.R. Kennedy has finally disposed of its prominent, outgoing South Yarra headquarters, 12 months after it first hit the market.

PHOTOGRAPHIC distributor C.R. Kennedy has finally disposed of its prominent, outgoing South Yarra headquarters, 12 months after it first hit the market.

Local private developer Michael Yates is believed to have paid about $19 million for the 3537-square-metre site with a low-rise office at 661-669 Chapel Street, between Toorak Road and the Yarra River.

The C.R. Kennedy office was reported to have been sold to design practice Metier3 last December for about $25 million. The site was relisted for sale in August after that deal fell through. The office was offered with a planning scheme for a 16-level, 377 unit residential-based complex. However given the high density of apartment towers recently approved in the South Yarra pocket of Forrest Hill, where 661 Chapel Street sits, a more ambitious redevelopment of three or more towers may be proposed.

The lower level of any new project may also make way for a major new shopping centre given the site's 65-metre frontage to Chapel Street, which commands the highest retail rents outside Melbourne's CBD.

C.R. Kennedy managing director Malcolm Kennedy confirmed the sale to Mr Yates. Dawkins Occhiuto's Andrew Dawkins and Walter Occhiuto marketed the site with CBRE's Justin Clarkson and Scott Orchard.

In the immediate Forrest Hill area, towers of between 20 and 30 levels are earmarked for sites on Toorak Road and Yarra Street.

The C.R. Kennedy office is not far from a 38-level office proposal, The Capitol, South Yarra, which will be the tallest skyscraper in suburban Melbourne, rising 133 metres.

Classic corner

A DANK building occupying what is arguably one of the highest-profile corners in Melbourne's CBD is for sale, aimed at investors with prudence.

The All Nations Backpackers, on the north-east corner of Spencer and Flinders Streets, is expected to fetch about $11 million, sources say, which would reflect a yield of about 8 per cent based on the asset's annual rent of $885,586.

The building, configured with ground floor retail tenancies, failed to sell after it was last listed for sale in June 2010.

Constructed more than a century ago, the five-level art deco building on an 883-square-metre block was previously known as the Sir Charles Hotham Hotel, and the Hotham Private Hostel.

It is leased to the All Nations until 2018.

After that time, the site lends itself to a higher density hotel or residential based redevelopment with units that would capture westerly views over the historic Grand Hotel and Southern Cross Station.

Kliger Wood's Russell Meerkin and Grant McKenzie are selling the backpackers facility for the Budget Accommodation Group, which paid $6.5 million for the asset in March 2006.

Retirement booming

RETIREMENT Communities Australia has made its third foray into the Melbourne market, paying about $15 million, sources say, for a 10-hectare site at Mornington.

The development site at 107 Bungower Road, opposite the Racecourse Road T-intersection, was sold by another developer affiliated with the Doncaster-based Darnley Group.

RCA acquired the site with a permit to develop 185 independent units. It is near another aged-care site being developed by Australian Unity.

Knight Frank selling agents Leigh Morris and Ken Smirk declined to comment specifically about the off-market deal when contacted by Capital Gain, but said demand for retirement village sites was on the rise again after dipping in 2009 and 2010.

Mr Morris said at that time, institutional players in particular relaxed their interest in the aged-care sector because of an obvious lack of funding support by the banks.

This year by comparison, he said, not-for-profit organisations and private investors able to access finance, had driven the market, with more than $100 million in retirement village property sold in Victoria by Knight Frank.

"The retirement, health and aged-care sector provides sound long-term investments with operators keen to secure quality sites in a range of locations with the onset of our ageing population due to spike in the next few years," Mr Morris said.

Medicine with pizazz

THE glitzy Caroline Springs medical centre developed by former Sydney Swans owner Geoffrey Edelsten is for sale.

Likened to a nightclub when it opened earlier this year, the super-clinic with colour-themed rooms includes an 18-screen television wall, giant chandeliers and waiting rooms with video games.

Occupying the lower two levels of a six-level Mercure hotel at 234 Caroline Springs Boulevard, the 1136-square-metre medical centre is expected to sell for about $5.3 million, which would equate to a yield of about 10 per cent based on the asset's current annual rent of $530,000.

Colliers International's Jeremy Gruzewski and Ted Dwyer are marketing the Caroline Springs medical centre with Fitzroys's Julian Heatherich and David Bourke.

Almost 90 per cent of the investment's income is derived by ASX group Sonic Healthcare, which in July paid Dr Edelsten a reported $200 million for a portfolio of medical centres. Dr Edelsten has no connection with the Caroline Springs property now.

Caroline Springs, about 25 kilometres from Melbourne, is considered one of the city's most successful new activity centres. Starting construction in the late 1990s and with estates targeting first and second home buyers, the precinct has this year seen new apartment proposals, to accompany recently developed shops and offices.

A new train station at Ravenhall, near Caroline Springs, is under construction, and will form part of the Melton line, between Rockbank and Deer Park depots, from next year.

Repeating sales

A CBD development site, which is the second in recent months to have negotiations fall over shortly after supposedly selling at auction, has sold, again.

A Malaysia-based developer with other Melbourne property interests is believed to have paid $3.25 million for the 291- square-metre site at 560 Flinders Street, opposite the Northbank apartment towers and near the Melbourne Aquarium, Yarra River, Southgate complex and Crown Casino.

The site sold with a permit to build a 33-level apartment tower able to accommodate 101 flats. However, industry sources say, the new owner is expected to try and increase the project's density with smaller studio-style apartments.

The existing permit allows for a five-level underground car park.

Kliger Wood's Grant McKenzie and Russell Meerkin confirmed the site sale when contacted by Capital Gain. They marketed 560 Flinders Street with S8 Property's Michael Cementon.

The site passed in at a September auction for $3.2 million, with a buyer reportedly agreeing to pay about $3.6 million shortly after, but then walking away from negotiations.

Late last month at 478 Bourke Street, the site of Melbourne's first synagogue, a historic building with a permit for an apartment tower sold for $12 million to a buyer who stayed at an auction after earlier observing the property sell under the hammer to another buyer for $14 million.

TWITTER: @marcpallisco

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