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Development wave hits city's north

A Chinese investor has paid $13.2 million for an office building in the city-fringe suburb of North Melbourne, an area poised for a new wave of development.

More than $130 million of property in North Melbourne and West Melbourne has changed hands since November, when a Singaporean developer paid $41.5 million for a 10-storey office building at 383 King Street.

The most recent deal involves an office property, owned and occupied by professional group Engineers Australia. It is on a 2076-square-metre site at 13-21 Bedford Street, just off the intersection of Peel and Elizabeth streets.

Six other tenants lease space at the 3000-square-metre office building but they are on short-term leases, with the longest ending in 2017.

Savills Australia agent Nick Peden, who negotiated the deal with Clinton Baxter, said the buyer would keep the building leased for a few years before undertaking a residential development.

The property sold 32 per cent over its reserve, at a new record land rate for North Melbourne of $6358 a square metre, Mr Peden said.


The top three prospective buyers out of the 11 expressions of interest received by Savills were all based off-shore and the campaign attracted 125 inquiries, he said.

Another deal, further north in the suburb, on a 1943-square-metre site at 287-313 Macaulay Road, attracted 80 inquiries and sold for $4.8 million to a local developer with connections to Dubai. It was sold by Knight Frank.

"There are no barriers to North Melbourne development, no need for a Docklands-style taskforce. The infrastructure, the trams, the roads, favourable zoning and the strong community culture are already in place," Mr Peden said. "We are seeing a surge in developer and investor interest."

Other agents are also reporting renewed interest in the area. CBRE agent Josh Rutman said multiple offers were received for a 2271-square-metre parcel of land owned by veterinarian hospital Lort Smith at 15-27 Wreckyn Street.

He said local and off-shore developers were equally keen on the area and prices were far in excess of what was achieved 12 months ago.