Sydney-based developer Luxcon will break ground on its first project in Melbourne, a $130-million upmarket development overlooking Fitzroy Gardens, just as the city’s markets bounce back.
The 10-storey park-side development, at 372-380 Albert Street in East Melbourne, will replace an existing nine-level office building Luxcon acquired for $30 million in May last year.
Luxcon acquired the East Melbourne building from entrepreneur Nathan Cher, the co-founder of the Run Property Group.
The approved project will feature just 24 apartments—all with park and city views—with prices ranging between $2.5 million for a two-bedroom apartment to $25 million for the top-floor penthouse.
Luxcon managing director Ilya Melnikoff told The Urban Developer the success of this maiden Melbourne development, known as The Address, had allowed the developer set up its Melbourne office and extend its pipeline in Victoria.
“We looked for the right site for more than two years before committing to Melbourne—the city has amazing architectural and cosmopolitan diversity and lifestyle fundamentals which fit our brand perfectly,” Melnikoff said.
“The government has been very efficient throughout this health crisis and this amazing city—which has been built on a strong foundation of art, architecture, dining and culture—will return to its position as one of the world’s most liveable cities quickly.
“Understandably, things are taking a little bit longer to sell at the moment, but things are looking very positive over the medium to long term in Melbourne.”
A number of apartments sold ahead of the project’s official launch at the end of February, with local buyers—particularly from neighbouring suburbs—seizing their opportunity amid international border closures.
The Woods Bagot-designed project, which secured approval late last year, will feature two or three apartments per floor, serviced by direct lift access.
“I believe Melbourne, compared to Sydney, feels undervalued at the moment,” Melnikoff said.
“Special products will always attract buyers despite fluctuating market conditions.
“Our target demographic is much safer compared to other developers who are currently venturing into untested asset classes and build-to-rent models.
“Those types of projects will remove a lot of investor targeted stock from the market.
“And because of that, there is now a real opportunity in the post-pandemic climate to hit the right notes in Melbourne’s high-end market.”
According to Knight Frank’s prime global forecast for 2021, Melbourne prestige price growth is tipped at 1 per cent as sales pick up post-lockdown.
Melnikoff said the project will be funded through a mix of private equity and senior debt.
“We have a long-standing relationship with a local financier who understands our brand’s position in the market place and the types of products we have delivered time and time again in Sydney.
“They also appreciate the fact that these kinds of high-end projects warrant a different view towards pre-sale requirements, and as such, are not limiting.”
Melnikoff is now eyeing two further projects in Melbourne towards the second half of the year, with two potential sites at the tail end of negotiations—one in Port Melbourne and another in East Melbourne.
It also has plans to take construction of coming Melbourne developments in-house towards the the end of the year.
“The only way to preserve our brand integrity and design intent is to carry out our own construction management in an end-to-end program,” Melnikoff said.
“We are looking to set up exactly the same model that we have created for ourselves in Sydney.
“As the business grows we need to take responsibility for all aspects of a developer’s responsibility in terms of delivery and by bringing the construction after after-sales servicing in-house, we know we have complete control to elevate our buyers' ongoing experience.”
Construction on Luxcon’s East Melbourne project is due to begin in June. The project is expected to take about 18 months to complete.