Tim Gurner’s appetite for growth continues unabated with the developer, backed by Singapore’s sovereign wealth fund GIC, announcing plans to transform a prime Melbourne commercial site on St Kilda Road into an $800 million residential development.
The site, reported to have been acquired for $80 million, has been in Gurner’s sights for the past decade and it will be the second that Gurner Group has announced for the company’s GIC-backed build-to-sell fund following the July purchase of 189 Kent Street in Sydney for more than $200 million.
The Melbourne property, located at 424-6 St Kilda Road, comprises a site area of 4,651sqm and is currently occupied by two six-storey office buildings joined by a five-level atrium.
The prime corner site, which is bounded by St Kilda Road, Toorak Road and Queens Lane, is across the road from St Moritz, one of Gurner’s earlier joint venture projects with veteran Melbourne developer Morry Schawartz. The development was among Gurner’s first before striking out on his own with Gurner Group in 2013.
“I have had my eye on this particular site for over a decade, having cut my teeth with Morry Schwartz on 401 St Kilda Road in 2008 across the road so it’s humbling to be able to come full circle with another site now directly across the road some 15 years later, still with the same aspirations to create a new benchmark for residential design just as 401 did at the time,” Gurner says.
“Saint Moritz showed us the depth of this end of the market and we are excited to evolve and elevate this concept and take it even further with this project.
“With its prime iconic corner location it will become an iconic landmark for Melbourne so we cannot wait to do this site justice.
“As with all our projects we will be delivering iconic architecture, curated residences and six-star amenity, all with a world-class wellness and retail offering that will allow residents to live their best life.”
Gurner secured the redevelopment site via an off-market deal after the property was taken to market by JLL and CBRE late last year.
The site provides views over the Royal Botanic Gardens and Domain precinct, the city skyline and Albert Park Lake, as well as proximity to South Yarra’s retail and dining precinct.
Gurner plans to deliver apartments targeting ‘downsizers and lifestyle upsizers’ with a focus on wellness and lifestyle, with plans for on-site retail.
The site previously had permit approval for an 18-storey building with 51,000sqm of gross floor area, 339 apartments and 292 car spaces. However, that approval has lapsed and Gurner plans to submit a new planning scheme comprising 160 to 180 luxury apartments.
The company plans to let existing leases on the property run out before moving to demolition and development.
“This is a longer-term play for us as the buildings currently house some long-term tenants, so we’ll see out those leases before launching when the time is right,” Gurner says.
“We are fortunate to be in an incredibly strong position with a large amount of capital ready to deploy in a market that is deeply dislocated so we are taking a counter-cyclical approach to deals that make sense for our business.”
Gurner Group’s chief development officer Robert Clarke says the group is actively seeking more opportunities in Melbourne and Sydney, with the company expecting to announce further acquisitions soon.
“It’s a tough environment for developers and commercial asset owners currently, and the effects of interest rate hikes are still yet to really play out across valuations and interest covenants, so we do expect to see a continuing trend of office assets being put on the market at discounted 2022 prices,” Clarke says.
Gurner Group is working in both the build-to-sell and build-to-rent space with the latest acquisition backed by a $400 million investment late last year by Singapore’s GIC to drive the company’s expansion of build-to-sell projects in Australia.
Gurner separately operates a build-to-rent management platform in partnership with alternative asset manager Qualitas (ASX: QAL) which has a pipeline of 3,650-plus apartments on its books.
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