Redefine goes global at Bondi
Originally published on commercialrealestate.com.au
South African group Redefine Properties has made its first move into residential real estate globally by striking a deal to invest $50 million in preferred equity in the development of the $400 million Pacific Bondi Beach complex in Sydney.
This out-of-the-box investment play by Redefine, which is South Africa's second-biggest real estate developer, has been made because of the special nature of the project, which sits opposite Bondi Beach.
"You don't normally get a redevelopment opportunity of that size in a location like that," Redefine chief executive Marc Wainer told The Australian Financial Review.
In the development, the existing Swiss-Grand Resort & Spa will be converted into a luxury apartment, hotel and retail complex. It has attracted attention due to its plans to offer beachfacing "lighthouses" that could go for $25 million if they are amalgamated.
Mr Wainer is impressed by the penthouse properties, but he was attracted to what he called the surprising level of pre-sales that had been achieved-SO of the 94 apartments have sold -and the development's high quality.
Redefine knows Australia and, with its international affiliate, it owns about 26 per cent of the ASX-listed Cromwell Property Group, which focuses on local office towers. The South African group's shift into residential development, via a preferred equity structure, will help local developers Eduard Litver of Capit.el Group and Allen Linz of Rebel Property Group kickoff construction by October.
Mr Wainer said the chemistry with the pair was good and he hoped they would do more projects together, although Cromwell, who is involved in the Bondi project on Redefine's behalf, will remain the main conduit.
'We're really bullish on the Austrlian property market," Mr Wainer said. He explained that part of the attraction lay in the better yields and lower cost of debt on offer than in South Africa.
The developers have put the construction job out to tender to a list of about five groups and are also finalising construction finance with major banks.
Mr Linz says that the mood ofluxury buyers had picked up this year and recent apartment sales had been 25 per cent above initial pricing.
The developers are now locking in a boutique operator for 69 luxury serviced apartments and will take them to market at the end of July.
The project's retail component is also advancing with both a restaurant precinct and shopping areas attracting interest from big names.
After setting the purchase of the Bondi Beach hotel in late 2007, the developers withstood the global financial crisis that wiped out many other projects.
They are now looking at more projects with Redefine. "This is going to be more of a longterm relationship," Mr Linz said.