Boutique real estate financier Qualitas has acquired a St Kilda Road office tower for $80 million with plans to convert it into a luxury $300 million apartment development targeted at downsizing empty nesters.
Backed by the Schwartz family and with a high-powered advisory board that includes Mirvac Group director Elana Rubin and former MLC Private Equity CEO David Krasnostein, Qualitas has made a big push into the eastern seaboard residential market funding Aqua Apartments in Bondi Junction with Leighton Properties, Bouverie Apartments in Melbourne with Grocon and Spire Apartments in Brisbane central business district with Consolidated Properties.
Qualitas acquired the Fawkner Centre office property at 499 St Kilda Road from a consortium led by Malaysian developer IGB and plans to commence construction at the end of the year or in early 2016.
It will partner with private developer LAS Group, who had obtained a permit for the development on behalf of the consortium last year from then Victorian planning minister Matthew Guy.
“LAS Group did all the hard work to get the permit. We’ve come in as their capital partner,” said Qualitas managing director for real estate investments Mark Fischer.
Qualitas partnered with LAS Group on the recently completed $85 million Summerhill Shopping Centre in Reservoir in Melbourne’s north.
The tower was built in 1973 and is on a 6070 square metre site. It will be converted into a 21-storey development of 253 apartments with an average price of $1.1 million. It’s the first office-to-residential project Qualitas is financing and the first in the St Kilda Road office precinct since the early 2000s.
Mr Fischer said the development would be targeted at owner-occupiers downsizing from their family homes in the suburbs and looking to have some change left over to fund their retirement.
“We believe there is a big market for this type of product,” Mr Fischer told The Australian Financial Review.
One-bedroom apartments will start from under $500,000 with most of the two- and three-bedroom apartments priced under $2 million.
“As the project is an existing office structure, we are able to retain the high ceilings and the building has been redesigned to deliver larger apartments, offering purchasers an opportunity to consolidate apartments,” Mr Fischer said.
Qualitas has a pipeline of over 1000 residential dwellings in development and has plans for further expansion on the east coast.
“We have two transactions in the pipeline in Sydney and Brisbane – one is a residential development and the other is a retail project,” Mr Fisher said.
Mr Fischer said a key attraction of the St Kilda Road property was its location, overlooking Fawkner Park.
“There are only a handful of examples in other global cities such as London, New York and Tokyo of premium residential buildings being on a parkside location so this project has unparalleled attributes,” Mr Fischer said.