A Chinese family has paid $8,888,888 at auction for a small slice of Melbourne’s famous Collins Street.
But it was arguably the vendor, Phil Mehrten founder of Melbourne construction firm Probuild and his two investment partners who walked away the luckiest with their three-level office tower at 415-417 Collins Street selling $2.5 million above reserve on a yield of just 2.2 per cent.
Eight is a lucky number in Chinese culture signifying wealth.
Mr Mehrten, who together with former Probuild business partner and ex-AFL St Kilda player Wayne Judson and fellow Probuild director Edward Yencken, paid $2.28 million for the office tower in 1999, looked on as auctioneer Phillip Kingston revved up the huge crowd of more than 200 people who lined Collins Street alongside bemused punters exiting the Sherlock Holmes pub, while trams and cars sped past.
Mr Kingston reminded buyers it was a rare opportunity to own a property on Collins Street for what would normally just be a deposit on a bigger tower.
There were 12 bidders and 51 bids placed with an opening bid of $5 million. In the end it came down to the Chinese family and a local investor, with the under bidder walking away clearly disappointed when bidding ceased at $8,888,888.
The price paid for the partially vacant three-level office tower marketed by CBRE represented a rate of nearly $10,300 per square metre of net lettable area – well above anything achieved in recent memory.
“No one expected a result like that – but buyers seemed to understand the rarity of the opportunity given that this was the first freehold auction in Collins Street for over six years” said CBRE selling agent Josh Rutman who marketed the building alongside colleagues Mark Wizel, Lewis Tong and Paul Tzamalis.
“There is now genuine competition between both local and offshore buyers and this is being largely driven by the record low interest rate environment as well as the reduction in the value of the Australian dollar.”