Singaporean rivals join forces for $1 billion Melbourne supersite

Singaporean rivals join forces for $1 billion Melbourne supersite

10 November 2017

This week the AFR confirmed that two rival Singaporean developers — Chip Eng Seng and the Chow family — have buried the hatchet and agreed to put their neighbouring properties up for sale as a combined $1 billion development opportunity.

The rivals have appointed Colliers International to invite selected developers to make offers on the three properties, comprising 2551 square metres, to be sold in one line.

According to industry sources, the development opportunity could be worth anywhere between $150 million and $200 million. A development of the amalgamated site could generate $1 billion or more in commercial real estate.

The supersite offering was flagged last week when Chip Eng Seng’s $350 million Tower Melbourne project was abandoned and put up for sale after the developer faced a lengthy legal battle with deep-pocketed neighbour Chow, reports the AFR.

The Chow family maintained the Tower Melbourne would interfere with its own development at 150 Queen Street.

The stand-off spawned one of the city’s longest running and most litigious real estate disputes.

The dispute halted demolition of the existing office building at 150 Queen Street in late 2013.

CEL Australia, a subsidiary of Singapore-listed construction giant Chip Eng Seng, announced last week that it would refund an estimated $50 million in buyer deposits after cancelling the project.

The figure represented the 10 per cent deposits it had in hand for 556 sales contracts in the 71-storey tower, located on the corner of Bourke and Queen Street in Melbourne’s CBD.

The decision, announced to the stock exchange in Singapore, came amid the broader local concerns about the mooted outlook for apartment market oversupply.

The Sydney Morning Herald reported that the Tower Melbourne apartments were controversially sold to buyers in 2013 before CEL had received planning approval after it was advertised as “an iconic place to live in the world’s most liveable city.”

At the time, Melbourne lord mayor Robert Doyle labelled the pre-sales “arrogant” and a good example of why large projects should be decided upon by the city, not the state government.

According to Singapore newspaper The Edge, last week, the Singapore bank DBS believed the failure of the project could actually turn out to be a blessing in disguise.

“The fate of underlying property still remains unclear at this point,” said Singapore bank DBS.

“We see upside potential if and when ongoing legal proceedings are resolved given the prime location and that median prices for Melbourne CBD units have risen by nearly 50% since Dec 2012.”

“These could potentially be unlocked through the sale of the property, or if CES chooses to subsequently relaunch the site at a later date,” said the bank.

It’s possible that a single developer could restart the Tower Melbourne project, while working up new plans for the other two properties or begin again with a new scheme covering the entire area.

Offers on the supersite are due within days.