Failed bidders for the Currong and Allawah public housing flats were surprised at just how high bidding went, with the winners paying $47 million for the prime inner-city block.
Eight developers registered for the auction on Wednesday, each with $40 million in ready capital and a track record of major apartment developments.
Five dropped out before $40 million. The Village Building Company stayed in the bidding until about $42 million and Amalgamated Property Group until it was finally forced out when winning bidder SHL Developments went to $47 million.
Amalgamated Property Group head Graham Potts said the result was higher than expected and much higher than valued by some.
"I'm not disappointed. I'm happy that we set a limit and we went to that limit," he said.
It was difficult to assess an exact value with a bidder as keen as SHL, which "obviously valued it more than I did", Mr Potts said.
SHL is the company behind the Campbell 5 apartment development near Anzac Parade and the lake.
It has taken on Canberra developer Terry Shaw – involved in the Kingston Foreshore development, as well as the West Basin container village – as its development director.
Mr Shaw said SHL was "extremely excited" about the opportunity for "new energy and ideas" in the city. The Cooyong block, to be home to more than 500 apartments and commercial space, was a prime location.
"Our architects and designers are drawing on the success of Saint Germain and Greenwich within Campbell 5 and will apply this to create an inclusive inner-city community," he said.
The major owner of SHL is Jia Liang, of Red HiIl. She is one of three directors of SHL – the other two are Xi He of Forde, and Jing Shi of Deakin – and she is the major SHL shareholder through her company 338 Investment.
Mr Shaw said SHL was Canberra based and all its shareholders and directors were long-term Canberra residents, having lived, studied and worked here for many years. SHL was expanding nationally, having also bought a site in Brunswick, Melbourne, for mixed residential and commercial development.
The site was sold for the government by Colliers, headed by Paul Powderly, who welcomed the "excellent" price and strong interest in the site. SHL paid a $4.7 million deposit on Wednesday, has a year to pay the balance, and has five years to begin work.
Chief Minister Andrew Barr said the sale marked a significant development that would improve links to the Gorman House precinct. But he said it was just one of half a dozen renewal projects around the centre.
Asked how the government would ensure quality, he said the government was not acting as architect or developer so controls would be the usual planning rules.
"Given what they've put forward at Campbell 5, we can be confident that this is a development company where quality is going to be part of their approach," he said. "It was sale by public auction so it wasn't a beauty contest, it was land release."
Land Development Agency chief executive David Dawes said settlement would not take place till tenants had been moved from Allawah and Currong had been demolished, Meantime, SHL would do masterplanning and design.
An estate development plan covered the site. A range of residential types were allowed, including townhouses and apartments, plus community facilities and non-retail commercial space. Heights could range from three to 12 storeys, and must be configured to maximise solar penetration.
Improvements to the Currong street would include better pedestrian and cycling access and more street trees.
Village Building Company deputy chief executive Travis Doherty said he had judged a good price for the site to be about $38 million or $39 million, rather than the $47 million paid.
"We certainly felt it was tremendous site with great opportunities, but at that sort of price it didn't meet the criteria that we normally apply," he said. "We thought it was quite an iconic site for Canberra; we liked the proximity to the city; we certainly think Braddon's an up and coming part of Canberra."
New Acton developer Molonglo Group did not bid in the Currong auction, and Johnathan Efkarpidis said the price was "hefty". But it was a good location and the development would be good for the city, bringing more people, he said.