After more than five decades, the historically iconic Mitchell House and Milledge, two freehold properties situated on one of Melbourne CBD's most prominent corners, have undergone a significant transaction, marking the largest deal in the Melbourne CBD for 2023 at $56,000,000 with a 4.17% yield.
The sale of these adjoining properties is noteworthy, considering the relative scarcity of large trophy listings in the CBD throughout 2023. Positioned within Melbourne CBD's "Golden retail core" between Melbourne Central Shopping Centre and the Emporium, these properties constitute one of the largest privately held retail corners.
The transaction was facilitated by the expert team of Oliver Hay, Daniel Wolman, and Leon Ma from Cushman & Wakefield, complemented by transaction advisers Tom Byrnes and Scott Keck of Charter Keck Cramer. The assets were previously held by a longstanding private Melbourne family for over 50 years, further adding to the historical significance of the deal.
Cushman & Wakefield International Director, Oliver Hay, said: “In a period where the CBD market has been starved of sizeable transactions this is a strong indicator that prime CBD diverse assets are very resilient and appealing not only interstate investors but offshore private capital. Through a highly strategic and thought-out campaign the team generated over 10 offers for a mix of buyer profiles and over 39 inspections”.
Leon Ma, Director of Asia Capital Services at Cushman & Wakefield commented, “43% of the capital offered was offshore generated originating from Macau, China and Singapore and we except further interest from similar groups throughout 2024 as they look to snap up iconic assets around Melbourne.”
In 2023, subdued deal activity in Melbourne's real estate market was influenced by various challenges. The cost of debt surged to 4.35 percent by November 2023, creating a mismatch with stagnant asset values and cap rates. Despite a decline in transaction volume, Cushman & Wakefield Melbco Middle Markets express confidence in sustained interest from high net worth and private investors.
They anticipate a rebound in 2024 as investors aim to capitalize on CBD assets, buoyed by the expected return of office workers and immigrants pursuing higher-level studies in Australia.
