A Chinese investor has splashed out $11.4 million at auction to buy a small Carlton office building t in the heart of the city-fringe apartment and education precinct.
The three-level 1930s-era building at 21-25 Bouverie Street is leased to Grimshaw Architects until August 2019. But its placement on an 823-square-metre island site suggests it will fall to development.
Zoned mixed use, the building's immediate neighbours are apartments and it is across the road from Grocon's new apartment project on the former CUB site.
Vinci Carbone director Joseph Carbone said the buyer will consider options for the building at the end of the 2019 lease.
Competition for the property "was phenomenal", he said. "There were over 100 inquiries and six bidders in front of 100 people on the day."
The price, about 25 per cent over the reserve, represented value of about $13,850 a square metre. The building is leased at $468,000 a year, reflecting a sharp yield of 4.1 per cent.
While an overseas buyer purchased the property, the underbidders included local developers and some wealthy Melbourne families, Mr Carbone said.
Offshore buyers are not winning every competition for development sites. Magnate apartments developer Scott Emery beat 17 other tenderers to buy a Victorian villa on 1025 square metres at 638 Malvern Road, East Prahran, for around $3.9 million.
Beller Commercial director Fred Nucara handled the negotiations for the family who had owned the property, which backs on to Grandview Grove, for more than 50 years.
"Up to $5 million and even $10 million, local developers are very active. The three top tenderers were local developers," Mr Nucara said.
New planning regulations put this site in a residential growth zone with height regulations, which meant any development would be restricted to 21 and possibly 25 units, he said.
"The price equates to $160,000-180,000 a unit which is a big jump from the $100,000-120,000 that suburban land previously commanded," he said.
