On track for windfall
Investors on to a good thing with Gold Coast property that promises great redevelopment potential
THE old saying “on the wrong side of the tracks” might prove highly inaccurate for a group of investors who have pooled their cash to buy on the “wrong” side of the main stretch at Mermaid Beach.
They own a large property on the western side of the Gold Coast Highway, snared for $20.9 million late in 2015.
Their acquisition, the Pacific Square retail and commercial centre, has been bought for considerably less than the rate square metre being paid for land on the beach side of the highway.
The purchase, at $1232sq m, compares with deals on the “other side of the tracks” at between $2220, paid for a knockdown motel, and nearly $4000sqm, for land approved for an eight-level retail-apartment building.
North of Pacific Square, and also on the wrong side of the tracks, Singaporean group Ho Bee is trying to exit a large site that can take high-rises and which cost it nearly $2200sq m.
It’s apparently hoping for $3000sq m plus.
South of Pacific Square, prolific tower developer Barry Morris has paid more than $2300sq m for a future development site occupied by the Mermaid Plaza retail-office building.
The Pacific Square investors – some from Brisbane and others from the Gold Coast – have reasons other than the land price to feel chuffed over their buy.
They’re getting a 7 per cent plus return on their investment (the same as Barry Morris at Mermaid Plaza) for at least 10 years – that’s the average length of leases.
The property is loaded with redevelopment potential – the 1.73ha site potentially can take buildings with nine levels of apartments above retail and office space.
That said, it’s believed any new development is unlikely to occur in the current property cycle – it’s more likely when the light-rail system has been extended and goes past the front door.
When that happens, Pacific Square literally will find itself “on the wrong side of the tracks” – an expression that emerged in the days of steam trains when the rail line divided towns into prosperous and poor halves.
In this case, the “prosperous” half is the beach side of the highway, where homes sell for millions of dollars.
Pacific Square, by no means a glamour centre, has had some interesting owners.
They include Pat Zarro, a developer who aspired to build a tower called Zarro’s Arrow in Surfers Paradise and whose business went bust in the early 90s. Zarro’s Witan group flicked the centre to Sirromet Wines founder, Terry Morris for $7.5 million 25 years ago.
It was passed over to Morris’s son-in-law, lawyer Cameron Delahunty, for $9.5 million 12 years ago.
Interestingly, one of Pacific Square’s tenants is Supercheap.
The centre’s current owners probably think that’s how they bought the property – supercheap at $1232sq m.
THE PACIFIC SQUARE INVESTORS HAVE REASONS OTHER THAN THE LAND PRICE TO FEEL CHUFFED OVER THEIR BUY