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Looking to build a township in Melbourne

MOSCOW: After completing three high-rise projects in Melbourne, Australia, S P Setia Bhd is now eyeing the landed housing market there with a possible township development.

“We have completed three high-rise projects and have three on-going ones. We have been in Melbourne for more than eight years and made some money. We can embark on the second phase (of our business) to give us sustainable earnings instead of just a lump sum profit every three to four years,” CEO of Setia (Melbourne) Development Company Datuk Choong Kai Wai told reporters following the FIABCI World Prix d’Excellence Awards 2019 gala night in Moscow, Russia on May 30.

The developer won three awards that night including for one of its Melbourne high-rise projects, Parque Melbourne, which received the Silver in the Residential High-Rise category. The other two winners were Setia SPICE in Penang which won the Gold in the Purpose-Built category and Circus West Village at Battersea Power Station in London, which won the Silver in the Residential Mid-Rise category.

Parque Melbourne is one of S P Setia’s three completed projects in Melbourne. The other two completed projects are Fulton Lane and Maison Carnegie. Another three projects that are ongoing are UNO Melbourne, Sapphire by the Gardens and Marque Residences. All six high-rise residential projects are located in the central business district (CBD) of Melbourne.

Choong added that the Melbourne team now has sufficient manpower and profit to plan for S P Setia’s first landed housing development in Melbourne.

“Moving forward, we would like to buy sizeable land near the city to build something that we can sell every year for the next 10 years, maybe a township and placemaking development. We are looking to build something more sustainable,” he revealed.

He said the plan to build landed homes has always been in the business development plan.

“All the while we wanted to build townships, [so] we are constantly looking for a suitable site. The land must be doable, the market must want it and people would want to live there. We are in the first-world market and everyone has a property, therefore the choice of location is very important. We are ready to tender for one if we find something suitable,” Choong shared.

Nevertheless, he said Melbourne’s high-rise residential market remains resilient despite the fact that local banks are tightening loans and the state government has decided to increase foreigner’s property stamp duty surcharge from 7% to 8% from July 1.

“By the 1st of July, the state government will increase the stamp duty surcharge for foreign property buyers, which means foreigners have to pay a total stamp duty of 13.5%, up from 12.5% previously. This is very high. The banks are also tightening on loans to foreigners.

“However, there are people who still want to buy in Melbourne, because it is not an expensive CDB compared with cities such as Singapore and Hong Kong. For a few reasons I think the Melbourne CBD apartment market will grow – it is a liveable city and the population is growing,” he noted.

He added that there is a lot of potential in the high-rise residential property market in the Melbourne CBD given that only 3.6% of the population live in a high-rise unit while prices for landed property within a 10km radius of the CBD has skyrocketed in recent years.

“The increase in stamp duty surcharge would impact a few areas where there are a lot of offshore speculations but not the apartments in the CBD. In fact, the rental market is coming up because when the bank is not lending, the people have to rent first. The rental market is strengthening,” Choong said.

This story first appeared in the EdgeProp.my pullout on June 14, 2019. You can access back issues here.

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