International developers are snapping up apartment development sites in Sydney with booming prices allowing seasoned local players to cash in or ride the market themselves.
In the most prominent deal, property billionaire Bob Ell has cashed in on the Chinese investment boom by selling an office tower in Milsons Point on Sydney Harbour for about $80 million to successful mainland developer Bridgehill.
The Australian property legend will reap a gain of about $30 million on the sale of the tower, 52 Alfred Street, which he bought just four years ago from a Colonial First State-managed fund.
In a sign of the market shift, the highest value use of the 13-storey A-grade tower leased to top US company Kimberly-Clark, is seen as conversion into apartments.
Bridgehill managing director Yi Bin Xu confirmed he would pursue a residential scheme and said he was keen to present his ideas to local authorities.
Bridgehill is among the top buyers of apartment sites and its luxury projects have also won backing from local and offshore buyers. It paid $82 million last August for an old council depot in Zetland just south of the Sydney CBD, where it is advancing plans for six towers with about 800 apartments.
It is also developing a three-tower project in Mascot that it will launch midyear. Bridgehill recently pre-sold all the units in a luxury apartment conversion of the nearby TAL building in Milsons Point.
Agents CBRE's Justin Brown and Tim Rees brokered the deal, revealed by The Australian online, on Tuesday night.
"Developers are taking a view on the inner city markets of Sydney which is that high rates per square metre can be achieved for apartments without parking," Mr Brown said. "That is driving the value of the regeneration sites."
An Asian investor last Friday forked out almost $50 million for an amalgamated site in North Sydney at 144-154 Pacific Highway and 18 Berry Street. It carries a fresh approval for a 23-storey mixed use tower, with the bulk devoted to 181 apartments, and work could start this year. Mike Stokes of Chesterton International is believed to have brokered that sale but could not be contacted.
Savvy locals are also looking to feed demand for apartments from Asian buyers. Developer Allen Linz of Rebel Property Group, one of the backers of the $450 million The Pacific complex on Bondi Beach, is rumoured to be looking at buying a tower in the Sydney suburb of Burwood, as part of a group of wealthy investors.
The Michael Easson-led EG Property Group has been looking to sell the tower for more than $35 million for some months and it would suit Chinese buyers. EG just sold a Macquarie Park site to a Chinese fund manager for a shade over $25.17 million via Colliers.
Listed Australian players are active with the next major project to be launched in Sydney likely to be at Lend Lease's Darling Harbour Live where about 500 apartments are planned.
On the development side, veteran investor Greg Shand's Milsons Point office tower is tipped to sell to a residential developer for about $90 million. The 19-level tower in Lavender Street carries approval for 95 units and is to be offered by CBRE's Scott Gray-Spencer and Jones Lang LaSalle's Rob Sewell and James Aroney.