21 April 2015

Financial Review

Chinese developer Hengyi snaps up massive Melbourne site

Giant Chinese property developer Hengyi has emerged as the buyer for a massive development project on the edge of the Melbourne CBD, which has a permit for more than 1000 apartments.

Hengyi, which is a subsidiary of Shandong HYI Group, a powerful player in China’s Shandong province, has significant exposure through two other residential projects in the Melbourne CBD.

The Chinese group acquired the site at 170 Victoria Street from listed Singaporean developer Chip Eng Seng for $64.8 million last month.

The deal attracted considerable attention in the market. The Singaporean seller doubled its money in just two years after gaining a planning permit under the previous state government.

A hiatus in the approval of planning permits after the change of government and market uncertainty over how readily new Planning Minister Richard Wynne will dispense permits have added a premium to good sites with permits.

Chip Eng Seng acquired the corner site – a 2927-square-metre parcel of the former Carlton & United brewery – from Grocon only two years ago for $32 million.

Through its Australian subsidiary, CES Victoria, the Singaporeans won approval for a 72-storey Elenberg Fraser-designed tower comprising 1035 apartments.

The transaction is thought to have set a record for the Carlton area, just north of the CBD, with a land rate of just over $22,000 per square metre.

It was handled by Colliers International’s Trent Hobart and Bryson Cameron, who were not available for comment.

Hengyi, which also declined to comment, is embarking on a 607-apartment project in Elizabeth Street called the Light House. Nearby, it has redeveloped two neighbouring towers in William Street into residential accommodation.