A dilapidated Collins Street office on the street's busy Paris end has been snapped up by a Chinese investor for more than $18 million, reflecting a tight 2.43 per cent yield.
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The transaction at 10-12 Collins Street continues a stellar run for Melbourne's premium office boulevard, which has seen $306 million in assets (under $51 million in value) change hands over the past year with yields plummeting.
It follows the sale of the similar-era building at 14-16 Collins Street to Sotheby's auction house.
Low interest rates and volatile sharemarkets have heightened investor focus on income-generating assets and produced a depth of demand for B-grade and secondary CBD office buildings that was now at an all-time high.
"We are now seeing some of the strongest pricing for office and retail buildings since prior to the GFC," said CBRE's Josh Rutman, who negotiated the transaction with colleagues Mark Wizel and Kiran Pillai.
The latest building to sell, Victor Horsley Chambers, a Georgian revival-style office held by the same Melbourne family for 45 years, was offered to 16 registered parties in a boardroom auction where it changed hands for $18.675 million, almost $2 million above the reserve.
Mr Rutman said the depth of interest from Asian buyers was noteworthy and, perhaps, an indication of what to expect for the second half of 2016.
The four-storey Chambers office, in need of internal renovation and a facelift, was one of a pair of neighbouring Collins Street offices offered for sale last year.
Both the Chambers and next door's Chanonry building at 14-16 Collins Street have been listed by the National Trust.
The Chanonry sold late last year for $12 million to an undisclosed buyer which title records show was Sotheby's Australia boss Gary Singer.
Sotheby's has been behind a spate of recent sales and purchases.
The group sold its auction house in Armadale four years ago and took over two strata floors in the renowned Australian Institute of Architects building at 41 Exhibition Street, which it offloaded in March this year for $2.05 million and $2.1 million respectively.
Another floor in the building, level 6, was sold recently by CBRE for $3 million.
The upmarket auctioneers have since invoked a demolition clause in the leases of all the occupants at its new Collins Street building, giving them notice to vacate.
The tenant list includes Affairs of State, Amy Jean Eye Couture, Collins Street Optometrists and Market Intelligence Strategy Centre.
Sotheby's plans to do a major renovation of the building and occupy it as its new Melbourne headquarters.
International investors have been racing to park their money in Australian buildings from pubs to large office complexes and industrial estates.
A noteworthy auction in March last year saw several Chinese buyers battle over a small three-storey office at 417 Collins Street, which resulted in the final price reaching $8,888,888, an auspicious set of numbers by Asian standards.
Not all the buying traffic has been one way. Singapore's Fragrance Group is trying to sell a $78 million office tower on a prime corner site at 555 Collins Street that it bought in 2014 just before strict new planning controls were introduced that curbed its aspiration to develop a landmark tower.
