The Investment. York&George is a 22,900m² mixed use development project in the heart of the retail district of central Sydney comprising retail, commercial and residential. The development is an amalgamation of four properties acquired by Fife Capital in 2008-2009, discretely consolidating income producing properties. Planning approval was obtained for the project in 2013 and demolition of elements of the property commenced in May 2015. The project had a number of complexities, not the least being embracing the protection, restoration and adaptive re-use of the heritage buildings on the site. The project was completed in 2018 and on completion had 199 apartments totalling 15,200m², a podium of prestige retail exceeding 5,000m² and unique central city office accommodation in the heritage component of the project.
The Commerce. The total cost to consolidate the property was $67.85 million. This represented a price for the developable index of $2,963/m² which was assessed to be a significant discount to previous prevailing site pricing and this reflected the uncertainty in the market at the time.
Underlying the investment decision and the underwriting of the consolidation was the cost relative to historic pricing, the band of alternative uses available and the revenue flow from the existing properties.
The Plan. The depths of a global financial crisis is always going to be a defining environment for investment and those making it. In 2008, conventional funding lines were limited, sellers were anxious and the market was on edge. There were no signs of life in the real estate market. Courage and experience were required. The global economic dilemma combined with inevitable domestic noise, meant there were other mooted local projects in a holding pattern and uncertainty about the direction a recovery would take. Two scenarios were investigated and tested: a residential driven outcome and an office outcome. Both scenarios showed our investors an appropriate return. Recovery came first to the residential market.
The Execution. In November 2013, the residential component of the project was sold at a then record price for comparable projects. Subsequently a 75% stake in the office and retail component of the project was sold to a global real estate investor. The project has been highly awarded:
- Development of the Year
- Best Mixed Use Development (Australia)
- Best Commercial Building Green (Australia)
- Best Mixed Use Development (Asia) Finalist
- Best Mixed Use Development
- Best Mixed Use Development (Finalist)
- Best Heritage Development (Finalist)
- Best Residential Development (Finalist)