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Jeff Xu sells Victoria One for $13.6 million

People & Companies / Latest News

Australia / Melbourne

Nov 27 2018

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Prominent Melbourne property player Jeff Xu has sold his Victoria One portfolio of five CBD strata retail properties to a Melbourne based investor for $13.615 million on a 5.5 per cent yield and at what is thought to be a record building rate of $27,230 a square metre for similar properties.

CBRE Manager, Melbourne City Sales, Nathan Mufale, who brokered the deal with National Director Investments, Mark Wizel, Leon Ma, and Ben McMahon, said the result was unprecedented for strata retail in the Melbourne CBD.

``This is an extraordinary result, considering that 65 per cent of the building area was level 1 and 51 per cent of the portfolio derived income from level 1, and one that underscores the trending demand for strata retail in the CBD and at the same time provides developers with a level of confidence that  multi-level retail components have a ready market across both leasing and investment markets,’’ Mr Mufale said.

He said the location in a booming education precinct with a strong Asian international student catchment was a key consideration behind the high level of interest the portfolio had attracted.

``This marks the third strata retail transaction on Elizabeth Street within the last six weeks showing unquestionable confidence in a precinct which benefits enormously from its close proximity to the Queen Victoria Market, Melbourne University, RMIT, the Royal Melbourne Hospital, and Melbourne Central.

``The construction of the CBD North and State Library railway stations, currently underway, will only enhance those significant locational attributes,” Mr Mufale said.

The 452 Elizabeth Street portfolio comprises five strata retail spaces covering 500 square metres across ground, first floor and mezzanine spaces, which benefit from the exposure provided by a combined 50 metres of Elizabeth and Franklin street frontage and their location at the bottom of Golden Age’s 643 apartment tower. The properties are leased to established international tenants returning more than $750,000 per annum.

Mr Wizel said significant appreciation in land taxes for freehold assets was another important consideration for investors.

``When you have hundreds of apartments above you sharing a portion of the land tax it can make a significant difference to your outgoings and when margins are tight that can be of critical importance for some investors. 

``That is another factor driving the increasing demand for strata retail assets in CBD,’’ Mr Wizel said

 

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