16 April 2019
Commercial Real Estate
Ambitious Melbourne-based developer Sterling Global is planning an upmarket apartment project in South Yarra’s exclusive Como Hill precinct, after taking over a site from aged-care developer John Matthies.
The $35 million-plus transaction gives Sterling Global control over a 7900-square-metre parcel of sloping land on Alexandra Avenue, overlooking the Yarra River.
While the site has approval for an aged-care facility already, its new owner hopes to transform it into a low-rise project with 60 residences in a garden setting.
Director Brandon Yeoh plans to use the permitted existing building envelope – or a slight reduction – and retain the project’s original architects Bates Smart for the redesign.
Saint Cloud residence at 61 Kensington Road, South Yarra, that aged care developer John Matthies amalgamated into the parcel of land. Photo: Supplied
“There’s a lot of [intellectual property] there,” Mr Yeoh told The Australian Financial Review.
“It’s too much to throw away. It’s going to look similar, just more residential. The previous look was a bit more commercial.”
The deal was subject to approval by the Foreign Investment Review Board, due to the developer’s Chinese shareholding, which Mr Yeoh said was under 30 per cent. The FIRB process was “standard procedure” for a development site and a response was likely within three to four weeks, he said.
Revised plans
Sterling Global hoped to get the revised plans approved by the end of 2017, start marketing early next year and begin construction in late 2018. Build time of the $65 million-$70 million project would be more than two years, Mr Yeoh said.
“We are committed to deliver that project,” he said. “We build, we don’t flip.”
The site covered eight titles with three street frontages, the result of Mr Matthies’ efforts over five years as he spent $25 million to amalgamate neighbouring properties, including the well-known Saint Cloud residence on Kensington Road.
Mr Matthies, who operated aged-care facilities already through the Australian Aged Care Group, had originally been planning a boutique facility on the site before opting to sell up instead.
Rising land values and the federal government’s changed funding arrangements for aged-care services were behind the decision, he said.
“Sometimes you’ve just got to look at the financial viability of things,” Mr Matthies told the Financial Review.
Range of offers
Late last year CBRE agents Mark Wizel, Josh Rutman, Lewis Tong and Scott Orchard were appointed to handle the property.
It attracted a range of offers from local and overseas buyers. Some parties were looking to continue with aged care while others had different ideas, Mr Wizel said.
Contracts on the unique site were exchanged on Christmas Day with Sterling Global. The developer was founded only four years ago and is owned by three Chinese Melburnians with a development background in China.
In its biggest success so far, the developer won approval last year for a $700 million mixed-use tower in the Melbourne CBD designed by architect Jean Nouvel.
It is the second South Yarra project for Sterling Global, which has another luxury project on Toorak Road.
Despite intense development already, the upmarket inner-city suburb continues to provide opportunity. In recent years offshore players have gained a foothold, too, including Malaysian-backed developer Beulah International and another big Malaysian developer Gamuda Land.