Melbourne inner-city fringe development opportunities heat up says JLL. Despite a year of multiple lockdowns, Melbourne is still highly attractive to buyers seeking development opportunities, following two recent transactions in Abbotsford and Balaclava.

JLL’s Senior Director of Capital Markets- (VIC), Josh Rutman and Associate, MingXuan Li together with Sutherland Farrelly’s Paul Farrelly brokered a development site sale at 30-40 Flockhart Street, Abbotsford for approximately $14 million to a local private developer. The deal was negotiated off-market.

Mr Rutman said, “Abbotsford has been going through a period of significant re-gentrification in recent times, with many developers and businesses identifying the large amounts of upside offered by the area, namely its inner-city location and unrivalled amenity. This rapid transformation of the area includes numerous high-density residential developments which are interspersed with large scale commercial precincts housing global giants such as John Holland, Computershare, GSK and Nike.”

“Whilst the property presents some short-term challenges – impending lease expiries and planning constraints – the sale result reflects the strong underlying confidence in the inner city development market, particularly in locations that are well serviced by public transport infrastructure and retail amenity,” Mr Rutman said.

Mr Li said, “Melbourne’s strong fundamentals including population, employment and GDP growth are forecast to recover strongly. This is providing increased confidence for developers and investors and is fuelling a strong demand for new development opportunities in Melbourne.”

Looking towards one of Melbourne’s Bayside suburb of Balaclava, an Asian investor has paid $5.35 million for a row of warehouses at at 6-10 William Street, Balaclava.

The land at 6-10 William Street, Balaclava is currently occupied by brick 1920s warehouses and has laneway access. The new owner, an Asian developer, plans a premium mixed-use building in a neighbourhood noted for its creative demographic, good rail and tram links and a vibrant restaurant scene in Carlisle Street. Balaclava is eight kilometres south of the CBD.

JLL’s Senior Director of Capital Markets- (VIC), Josh Rutman and Associate,MingXuan Li brokered the deal for 6-10 William Street, achieving a $4620 per sqm land rate in its off-market sale this month.

Mr Rutman says investors have continued to scout large bayside sites for boutique apartments and townhouses, despite the COVID-19 led hit to the Victorian economy.

“Melbourne’s population and employment growth are forecast to recover strongly, which in turn is fuelling demand for development opportunities,” he said.

Mr Li says offshore investors seem undaunted by Melbourne’s waves of COVID-19 restrictions.

“Offshore investors are still keen on the prestige suburbs favoured by affluent home-buyers, and that includes the more bohemian bayside areas such as Balaclava. The low costs of borrowing remain a strong lure in the market for developers actively looking for sites,” Mr Li concluded.

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