he world’s biggest distributor of Mercedes Benz, Lei Shing Hong, has purchased Brisbane’s famous Breakfast Creek Wharf for about four times the price it was purchased for three years ago in what is clearly a sign of an overheating property market.
The Hong Kong-based conglomerate has paid $26 million for the 7843sq m riverfront commercial property which will make way for a brand new Mercedes Benz dealership as well as hundreds of new apartments in a market already reaching record levels of supply.
The vendor, New Zealand-born developer and garbage king Balfour Irvine, purchased the property at 194 Breakfast Creek Road, Newstead for just $6.3 million in 2012. There has since been no new rezoning or uplift from planning.
“We bought the site of the Bank of Scotland a few years ago and we have now agreed to sell the site to the [Lei Shing Hong] group,” Mr Irvine said.
Mr Irvine built a reputation on buying the Teneriffe Woolstores also on the Brisbane Riverfront and developing them.
DEAL PROGRESSING
Lei Shing Hong Group’s representative, Andrew Basham, confirmed the deal was progressing.
“We are long-term holders of the properties we purchase,” Mr Basham said.
The transaction, negotiated by CBRE’s Peter Court, Mike Walsh and Michael Irvine, will bring the Lei Shing Hong’s total buying spree in Brisbane to more than $100 million.
Late last year Lei Shing Hong snapped up Mercedes-Benz Australia’s grand showroom in the heart of Brisbane’s Fortitude Valley for about $40 million. That property, at 365 Wickham Street, is to be developed into 700 apartments over several 20-storey towers.
Earlier last year the company spent about $50 million buying an office tower at 300 Adelaide Street also in Brisbane, owned by Charter Hall’s Direct Property Fund.
Brisbane, which has substantially lower value for properties compared with Sydney and Melbourne, has been the beneficiary of several Asia-based buyers looking to to gain a foothold in an apartment market which still shows top of the cycle sales – at around 1300 for inner city per quarter.
Chinese residential property developer R&F Properties has made a record gamble on Brisbane’s apartment boom, settling on a riverfront site for $82.5 million late last year, or just over three times what the vendor had paid in 2013.
The Reserve Bank of Australia keeps a keen eye on the activity and has noted that there is some risk in the amount of capital flowing into commercial property.