Asian property developer Salcon has swooped on ragtrader Roger David's former headquarters in Melbourne in response to a slowing property market in Malaysia.
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Salcon Development paid $37.88 million for the site in Claremont street, South Yarra, which has been earmarked for development.
The group said in a statement to the Malaysian exchange that it was targeting Australia because of the "general slowing down in the Malaysian property market".
"This acquisition will allow the group the opportunity to establish a presence in the Australian property market, where the demand for Australian properties has remained strong in key cities such as Melbourne, in particular in the inner-city areas," it said.
The two-storey Roger David office is in the centre of a development storm that has transformed a former industrial precinct into a thriving high-rise residential hub.
Salcon Development is an offshoot of the Salcon water management conglomerate which has interests in palm oil, plantations and engineering and a market capitalisation of around $227 million on the Malaysian stock exchange.
The firm is a relative newcomer to property development in Malaysia and Australia having started its first real estate venture just three years ago in the fast-growing town of Selangor, about 10 kilometres outside Kuala Lumpur.
Claremont Street will be its first foray into Australia.
The Roger David family built the prominent retail chain around menswear stores that have been run from the South Yarra office since 1980.
Last year, the firm won approval to replace the office with a 31-level, 399 unit apartment building which will tower over Melbourne High School nearby.
The property was sold by CBRE and Colliers International.
CBRE's Mark Wizel said despite the Victorian government and major banks giving developers plenty of reasons to be cautious, Salcon had determined underlying conditions were strong.
The group would probably build fewer, but large, apartments aiming the project at a higher-end market, he said.
Australia's eastern coast capitals, Melbourne, Sydney and Brisbane, will see an extra 44,784 apartments built this calendar year, up almost a quarter on last year's 36,486.
The flood of apartment construction recently prompted Reserve Bank governor Glenn Stevens to predict that the wave of settlements about to occur this year will push unit prices lower.
