UEM Sunrise presents Conservatory Melbourne

CONSERVATORY Melbourne, UEM Sunrise Bhd’s second project in Australia, was launched last October and has received good response.  The freehold project, which made its debut with a worldwide preview in August, targets buyers from countries such as China, Brunei and Europe.

Sitting on 0.5 acres on Mackenzie Street on the northern fringe of Melbourne’s central business district (CBD), the project is near the Royal Melbourne Institute of Technology University, The University of Melbourne, Melbourne Museum and the shopping district. The CBD is criss-crossed by trams, and the ones running in the heart of the city are complimentary.

Conservatory is UEM Sunrise’s second project in Australia, the first being Aurora Melbourne Central. The 92-storey tower, to be built on a carpark, was launched in late 2014 and is sold out.

The company’s third project will be the redevelopment of an office tower — on 412 St Kilda Road — into a 21-storey luxury residential project. The 16,000 sq m site was acquired for A$58 million (RM175 million) in August. The office tower is currently occupied by the Victoria Police and will be vacated after mid-2016.

UEM Sunrise managing director and CEO Anwar Syahrin Abdul Ajib says their foray into Australia has paid off. “Fate has it that we had this opportunity ... to have such good locations. We had people saying we had paid too much for the [Aurora] site, but look at it now.

“I guess that’s the difference between a government-linked company and an entrepreneur-driven company … we went through a more stringent process. We were under a lot of pressure. We were asked, ‘Why did you buy a car park with no planning?’ But thankfully, the value has appreciated.”

“The land prices [for all three sites] have since appreciated by 30% to 40%,”he adds.

Conservatory is targeted at white-collar professionals and students who want a slice of Melbourne’s cosmopolitan lifestyle. However, it is tranquil enough for retirees downsizing from bigger homes in the suburbs.

The 42-storey luxury project has a gross development value of A$320 million and will comprise 446 units of 1-bedroom, 2-bedroom/1-bathroom and 2-bedroom/2-bathroom apartments with built-ups of 82 sq m to 181 sq m. Prices start from A$447,000 (RM1.38 million).

According to UEM Sunrise chief operating officer (commercial) Raymond Cheah, there are two colour palettes for its finishings — darker Spring and warmer Autumn.

A variety of facilities are located on the seventh, 28th and 42nd floors. They include pools, patios, entertainment rooms and a sky deck that overlooks the National Heritage-listed Royal Exhibition Building and Carlton Gardens. The Carlton Skydeck offers an observation deck, a private Jacuzzi, a social Jacuzzi and skypods.

Likely to be the tallest in the vicinity, the building should offer unobstructed views.

Banking on these unique qualities, UEM Sunrise spared no expense in launching the project last year in Melbourne, bringing celebrities to fete potential buyers. Chef Nik Michael Imran — a runner-up in the first season of MasterChef Malaysia whose cuisine at his restaurant PickNik at Publika, Selangor, and whose Malaysian-Australian parentage underscore the bond between the two countries — was flown in to make satay made from Kobe beef and other fresh Australian produce. After that, MasterChef Australia mentor Shannon Bennett made warm chocolate orange mousse — the signature dessert at his famous Vue de monde restaurant at Rialto Towers, Melbourne.

Among the buyers at the launch was the Singaporean billionaire who bought the entire 41st floor, which will comprise four penthouses, for A$7 million.

The buyer, who has requested anonymity, is the head of a diversified company listed on the Singapore Exchange and owns a famous Chinese food chain.

What compelled him to splurge on the entire floor? The unique location, he replies. While he concedes that it is priced at a premium, he believes it is a good long-term investment.

“If you love the property, the location, buy first, even if it seems expensive. Because over time, it will be worth a lot more,” he explains. The globetrotting billionaire is looking at a property in Shibuya, Tokyo, next.

More owner-occupiers

Demand — local and international — for luxury condos in Melbourne is certainly rising, says Savills Australia head of residential projects in Melbourne, Joseph Catanese.

According to him, local buyers are divided into two main groups — downsizers, who are older people moving from their large family suburb homes into smaller units in the Melbourne CBD, and high-net-worth professionals who are usually without children.

“The international purchaser is seeking the security of an investment opportunity in a property market that has experienced continual and sustained increases in rental yields and capital appreciation. Buying in the Melbourne CBD is seen as a strong value proposition,” says Catanese.

Prices of upscale high-rise homes in the area range from A$1 million to over A$5 million, “depending on the level of quality, exact location and overall size and accommodation of the apartment”, he says. He notes that more upscale developments are now offering larger 2-bedroom and 3-bedroom units.

Catanese says buyers have become more discerning about the quality and style of apartments and developers have raised standards to meet those expectations.

“Apartment buildings with high-standard finishes and fixtures are now becoming the norm. These luxury buildings also include indulgent facilities and amenities such as 24-hour building concierge service, pools, private dining rooms, cinemas and relaxation zones. Supply is expected to increase in Melbourne’s CBD over the next three years to cater for the increased demand,” he says.

“This is due to significant local demand, coupled with demand from international buyers who are either transitioning to Melbourne or looking to invest with a long-term view,” says Catanese.

“The apartments are either for the buyer’s own use (or for short-term stays in Melbourne). International buyers take a longer-term view of the investment opportunity so as to take advantage of the continuing market strength and forecasted price increases in Melbourne,” he says.

“The capital growth for these luxury apartments is generally no different from other residential properties in Melbourne. The growth is dependent on market forces and follows the trend of the specific location. Their rental yields are historically at the higher end of the rental market, as these luxury residences are normally in the most convenient and sought-after locations within Melbourne and the CBD.

“The rental tenants for these luxury apartments are mainly white collar workers with a higher-than-average income. Yes, they can afford to live in these luxury apartments as it complements their lifestyle (CBD location, proximity to transport and other sought-after amenities such as restaurants and shopping centres).

However, CBRE Residential Projects Victoria managing director Andrew Leoncelli says about 90% of demand for luxury apartments in the CBD comes from downsizers.

“They don’t get rented out traditionally … rates of between A$1,000 and A$2,000 [per month] are achieved.”

“Luxury apartments supply has grown on the back of increasing demand from a mature local buyer’s market. Traditionally, [they comprise] less than 5% of all stock. We expect the [luxury apartment sector] to continue to grow in supply. It’s very difficult to put figures on growth or yield but yields for all apartments are circa 4%,” he says.

Leoncelli expects supply of such homes, which is currently quite low, to double in the next few years. “Supply is only ever equal to demand for this kind of product.”

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This article first appeared in City & Country, a pullout of The Edge Malaysia Weekly, on Jan 18, 2016. Subscribe here for your personal copy.