Apartment Slump Hits 412 St Kilda Road Deal

The much-hyped Mayfair residential development at 412 St Kilda Road will likely not go ahead, following a decision by Malaysian developer UEM Sunrise to sell the property.

Hickory was slated to construct the project, which would have contained 152 apartments. 

The building will require refurbishment by the prospective buyer in order to lease its empty office spaces. 

The empty 22-level office building, which was purchased for $58 million in 2015, is likely to sell for around $100 million.

The sale of the property will result in potential lost revenue for Hickory, and highlights the danger of apartment developments for builders, given that industry standards require a minimum of around 80 per cent sold before construction can commence. 

This comes in light of speculation that Hickory was preferred contractor on the 85 Spring Street development which changed hands in April from Golden Age to Anton.

UEM had sold nearly 40 per cent of dwellings in the apartment tower, meaning should the sale go ahead, contracts with purchasers would need to be rescinded. 

Across the Yarra, UEM is close to filling up its Aurora Melbourne Central tower, recording 98 per cent transferred to buyers, bringing the total value to over $379 million. 

News of the St Kilda Rd sale should come as no surprise, following a general downturn on apartment sales across Melbourne. 

Fragrance Group’s 78-storey Melbourne tower, which is under construction opposite Southern Cross station, initially enjoyed sales of 61 per cent following its 2015 launch, but has struggled to fill remaining dwellings, only closing on 11 in the past year. 

A number of recent big-ticket sales along St Kilda Road suggests more attempts at large-scale residential builds in the pipeline. 

Reports from Domain that apartment living is thriving in outer suburban areas like Albion and Cranbourne hints that inner-city, luxury units are not as favourable as they once were, and potentially leaving developers inconvenienced by empty office buildings. 

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