Jeff Xu's Golden Age Group and partner US investment platform Starwood Capital have walked away from a $600 million residential project at Melbourne’s 85 Spring Street.
Golden Age joins Chinese-backed developer Woodlink in withdrawing from Melbourne's unstable residential market, with Woodlink engaging CBRE to sell its $360 million “Illoura House” apartment project on St Kilda Road.
Golden Age's initial confidence in Melbourne's apartment market when purchasing the site has been stifled over recent months, instead opting to sell the asset as demand softens to recycle funds for commercial assets.
Golden Age bought the Spring Street site in January 2017 from private developer Grocon for $75 million with plans lodged soon after for a 39-storey, 225-apartment tower.
Grocon's initial proposal for a 44-story residential project was knocked back to 39 levels and had the number of apartments reduced after initially being refused a building permit.
Golden Age will reposition its investment into commercial assets and new development opportunities as new apartment projects waver.
The developer, which is known for its luxury high-density developments, has expanded into the house and land residential market in a bid to diversify its portfolio and solidify its $4.2 billion residential and commercial development pipeline.
Xu’s first project was a 4-storey student apartment block in Melbourne's eastern suburbs in 2006, which was followed up with the Sheraton Hotel in Little Collins Street.
The developer lodged plans for a $76 million 19-storey luxury hotel in the heart of Surry Hills as well as plans for a new $350 million residential development in Melbourne’s newest high-rise suburb, Box Hill.
Golden Age also secured the air rights to develop above The Glen Shopping Centre in Melbourne and is working with Time & Place on an east Melbourne office project.
Developer Woodlink has also scrapped plans for a $360 million residential development on Melbourne’s busy St Kilda Road, instead opting to list the property known as Illoura House.
The site, which was acquired by Woodlink in late 2015, was earmarked for a 163-apartment development when plans were lodged in April 2018.
The Chinese-backed developer has instructed agents CBRE to market the property located in the up-and-coming shopping, residential and dining district.
The building, currently 85 per cent vacant, remains poised for development, with an approved permit for an 18-storey building.
CBRE's Lewis Tong said the recent transaction history of the St Kilda Road market would suggest strong interest from Asian buyers who have outlaid more than $1.2 billion along the street over recent years.
“The most recent sale saw private Chinese investor, Michael Xie, pay $163 million for the nine-level office tower at 509 St Kilda Road on a fully leased yield of 4.96 per cent, setting a new benchmark for the precinct,’’ Tong said.
The corner site offers additional potential for enhanced retail development given the expansive land component and its three street frontages.