Flush with cash and loos

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This was published 14 years ago

Flush with cash and loos

By Marika Dobbin

THE launch party to sell Avon Court in Hawthorn this month was suitably extravagant for a mansion with 12 toilets.
Thespians in period costume acted out an Elizabethan ball on the front lawn of the Shakespeare Grove address. A Japanese chef grilled giant Queensland green prawns in its outdoor teppanyaki kitchen — one of seven. And professional swimmers did laps in the twin outdoors pools for two hours straight, while boxers sparred in the downstairs gymnasium.
It all would have cost vendor Clinton Casey, a developer and former Tigers president, a motser to put on, but it seemingly did the trick.

The party and record sale price of almost $21 million that followed made a statement that even the opera singer in Avon Court’s ballroom could not drown out. The top end is back in a very big way.

When news broke on Wednesday that Avon Court had sold to a Melbourne business identity, it became the third house in a week to surpass the old record of $18 million. That was set in the 2007 economic boom by art dealer Rod Menzies for Stonington Mansion in Malvern.

This week’s stunning price capped a series of eye-poppers that began with the $15 million sale of a penthouse at The Melburnian last month, which construction executive Peter Devitt bought as a birthday present for his wife.

The penthouse had similar marketing treatment, with its own campaign movie starring the girlfriend of Hawthorn superboot Buddy Franklin and three celebrity chefs, including George Calombaris, cooking for the launch.
Lela McGregor, head of marketing for agency Kay & Burton, which handled both sales, says the lavish parties and movies were a revolutionary approach to real estate advertising.

‘‘I call it the Prada bag theory,’’ she says. ‘‘You would not buy a Prada bag for $1000 if it didn’t have the logo. And you wouldn’t get the best result for a property without the marketing and hype.’’

But new marketing does not explain all the sales that followed this month, including historic Miegunyah on Orrong Road, which went for $20 million to another local business identity a fortnight ago.

And another result had little publicity, but caused the most industry stir. Jayco Caravans Gerry Ryan, paid $18.5million for a single-storey house at 13Albany Road, Toorak. It is a picture-perfect mansion, but has no basement, or space for a pool and just 2440 square metres of land.

‘‘We are absolutely gobsmacked,’’ buyers advocate David Morrell says. ‘‘It isn’t worth that sort of money, any way you look at it.

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‘‘Everyone said the top end was going to be tested by all these listings and it’s coming through with flying colours.’’
There is no doubt the run of mega sales is unprecedented, made even more extraordinary by the fact that just a year ago the top end was on its knees.

Only 11 Toorak sales were recorded last November, compared with triple that this month, according to the Real Estate Institute of Victoria.

And all the headline sales have been to local businessmen, although the prices they paid may have had something to do with rumours of the imminent return of mysterious expats, who may well be mythical. And the locals have stepped in just as a spree by overseas buyers this year faded with the rising dollar.

So why the sudden rush on trophy homes? Doyen of Toorak real estate Gerald Delany says a main factor is that there has never been such a smorgasbord of prestige property on offer in his more than 35 years as an agent.

Three more extreme-luxury homes are on the market, at the expression-of-interest stage. They are sprawling Dunraven on Clendon Road in Toorak, Smorgon Steel chairman Graham Smorgon’s mansion, also in Toorak, on Linlithgow Road, and 59 Kensington Road, South Yarra. And with the blistering results this month, more owners still could turn vendors.

‘‘It’s very unusual to see four of them in the marketplace at once,’’ Mr Delany says. ‘‘You would normally anticipate one a year of this calibre.’’

While some vendors are selling to reduce financial stress, most of the smattering of $13million-plus homes are being sold for other reasons — a death in the family, empty nesters downsizing, and moves interstate.

‘‘What’s interesting is that there’s no duress in the market, no forced sales and that’s a significant factor given the times we’ve just been through,’’ Mr Delany says.

The glut of landmark homes has coincided with a swell of demand that started to build a year ago, and perhaps even further back, when a period of inactivity began to cripple the top end. It was a stand-off between buyers who were hesitant about the economic future and vendors who were sceptical they would get enough return.

But nowadays buyers and vendors are feeling optimistic about the global economic outlook, growth in property prices and their own finances.

And, curiously, the meltdown last year that started with some dodgy US home loans may have made investing in Melbourne property even more attractive.

While prices at the high end were hit hardest, property fared well compared with other investments. It was also the first sector to recover, making it seem safer than shares and remained the only investment capital gains tax-free (for a principal place of residence).

Many of Melbourne’s elite, who have been able to accumulate vast wealth in the past 15 years, have been able to claw back losses with the rebounding equities market and some companies back on track.

But even with multiple local parties interested in each prestige property listed, there are still some mixed signals in the market.

In the past fortnight eight out of 27 Toorak properties have been passed in at auction. Eighteen auctions are scheduled for today.

Appetite at the top appears in some cases to be property specific, with finished trophy homes on exclusive streets that offer lifestyle features such as spacious grounds, pools or tennis courts the most in vogue.

Agent Alastair Craig, of Jellis Craig, is a friend of the purchaser of Avon Court and says no other Hawthorn property could hope to fetch such a price.

‘‘It is one of the best homes in Melbourne, on a beautiful land parcel,’’ he says. ‘‘It ticked almost all the boxes for this particular purchaser and if he’s going to live in it for the next 15 to 20 years it doesn’t really matter if they end up paying an unprecedented amount.’’

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With continued growth in Melbourne property prices forecast for next year, buyers on all budgets are taking the opportunity to buy on low interest rates. And if the dollar loses ground, demand could really take off.

The only possible dampener at the top might be if vendors see the recent record results and raise their price expectations.

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