Charter Hall Group (ASX: CHC) took over the site at prime locations of Collins street. As per the recent data released by Domain Group, house prices were down by 3.9% in Melbourne in three months to September. At present, national property market is highly impacted and facing cooling off period. Clearance rate has fallen by 50% in recent weeks.
Under such prevailing conditions across reality sector, Charter Hall came up with recent development on its proposed residential project on October 29. Failed to get buyers for residential project made the Singaporean owners to finally take an exit from the deal. The company, CHC took over the site located at the prime Collins street. Site worth of approximately $140 will be designed for office development.
The site is located at the corner of King street, 555 Collins street. However, at present times, properties located at the Collins street were impacted with the overall sector impact and high-rise apartments located at the street also faced the negative investor sentiments, impacting the overall demand for the properties. Charter Hall prime office fund is having one site already in possession, and with this site undertaken by it, Charter Hall is now having two sites at 55 King Street. Two sites together total to approximately 4620 square meters, providing major accumulation towards western end of Melbourne central business district. According to Matthew Brown, Fund manager of Charter hall public fund, the site is a favorable spot with attractive price and nearby attraction adjoining to the already existing property at 55 King Street. The acquisition was well in line with Charter Hall prime office fund’s investment strategy of acquisition of sites in tightly held markets to work on “develop to core” part of its investment strategy. The sale process was negotiated by Knight Frank’s Paul Henley and Scott Newton.
The same strategy of acquisition was taken into consideration for the acquisition at the other end of the city at northern end of Lonsdale street. The site with an approx. size of one hectare will have a $700 million office development which is well under process. Second acquisition of $200 million for office development at Lonsdale street has also been approved. Immediately after one year from its project launch, Koh Wee Meng sold 46% of the residential tower project at 555 Collins street launch. Project approval was received after Fragrance stepped back from its original plan for the prominent sites and buying it directly for approximately $78 million in 2014 from the developer and Financial Rich Lister Harry Stamoulis. With the tightening of the planning system in the city by the formation of the new government and planning minister Richard Wyne, Fragrance decided to sell its Collins street site. Two years ago, it failed to get any buyers for the project. Fragrance changed the work line and secured an approval for the development of smaller, residential only properties and began its marketing in the middle of the last year.
After the announcement of the Singaporeans exiting from the $140m deal, CHC was slightly down. However, it recovered soon and was seen trading at the levels of $6.905 (3 PM AEST).
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