Melbourne’s emergence as a Global City is exemplified by an increasingly
segmented and diverse apartment market – each component of which demonstrating its clear demand and supply characteristics. In the inner city luxury apartment market, there are a select number of projects which deliver on emerging demand from sophisticated purchasers. 35 Spring Street, completed in early 2017 by CBUS, is one such example.

To discuss the notion of luxury and how Melbourne’s apartment market continues to mature beyond mass market one-size-fits-all product to one of increasing sophistication, we interview Sam Nathan, Managing Director of NPM.

Sam is a long-time specialist in the medium and high-density housing space, with both a macro and intimate fine-grain understanding of Melbourne’s apartment market. To understand the true nature of in-demand luxury apartments, Sam uses the word “scarcity” as an emerging and increasingly critical factor in determining the position of a product at the upper end. “In the discussion around luxury it is obvious to talk about the nature and quality of finishes and materials. However, the market is maturing and purchasers are increasingly understanding that the true scarcity of an opportunity lies beyond the cosmetic aspects of a property, and is entrenched much more in the context of the location, calibre of ownership and the difficulty in replicating either a building or individual apartment. Sure, we see high quality apartments coming onto the market all the time, but which of those become truly rare commodities who’s future will be dictated not by external influences, but their fundamental position in the market?” Case in point. Sam and his team have transacted 37 resales in 35 Spring Street over the past 12 months. Says Sam, “The market reacts strongly to the right product. In the context of the CBD market, the opportunity to take your position in a contemporary building at the most highly regarded CBD address is a scarce commodity. For sophisticated purchasers, that value proposition is the first hurdle to cross. From that point, the quality of the fittings, the fixtures, the room dimensions and the calibre of the project and purchaser profile come together to reflect the position of a building in the market. It would not be unreasonable to suggest that no other building has behaved or become as established in the market as quickly and definitively as 35 Spring Street, and we greatly enjoy the opportunity for high calibre discussions about the position of project, other buildings and broader high value market. When examining the demand for high-end projects it is worthwhile stepping back and asking ourselves, what is the purchaser profile for these buildings and what sort of expectations do they carry with them when deciding to make one of the most significant living choices of a lifetime. In this context Sam notes “A purchaser who is coming out of a premium residence in a high-value suburb inherently understands the concept of scarcity and uniqueness, but may not have been exposed to it in the context of the apartment market. For those at the very high end of the spectrum, luxury equates to the scarcity of the opportunity and difficulty in its replication.”

For city living, a key component in purchaser’s thinking has been what you see outside your windows. View lines are fraught with difficulties in a growing city, and there is increasing discussion about the impact on an apartment in the event as aspect was blocked or impacted by a new project. Protected views of landmarks, parklands, and iconic panoramas are currently critical to the perception of luxury apartment living, however Sam is not so sure this will continue in the longer term as the market matures further. He notes “increasingly, given the emerging scarcity of commensurate development sites, cache will be associated with an address or location that
carries inherent exclusivity, which may due to the nature of surrounding development not be characterised by spectacular views.

This is already demonstrated in bespoke developments through prestige residential suburbs such as Toorak and the Domain precinct of South Yarra, and will in turn extend to the city environment”. Think of the structure of truly exclusive neighbourhoods such as Soho and Tribeca in New York, or Kensington and Chelsea in London. “The majority of established and even new development in these neighbourhoods don’t provide the opportunity for views, but they are regarded as some of the best addresses in the world given their reputation, amenity and scarcity of opportunity to acquire larger, higher quality residences.” What of the “tale of two cities” – that of Melbourne versus Sydney for luxury apartments? “Just as across the traditional housing markets, there is a marked arbitrage in pricing between the Melbourne and Sydney high-end apartment sector. Only very premium central city projects breach $20,000 per square metre in Melbourne, and within the prestige suburban markets we may see that increase to $25,000 per square metre. In contrast, pricing for otherwise comparable offerings in Sydney can push towards double that threshold.” Sam says. 35 Spring Street as a prime example. “At 35 Spring Street, a park front 2-bedroom apartment can trade between $1.6 million to $2 million whereas an equivalent address in Sydney, for instance in Macquarie Street, would carry expectations of around or in excess of $3 million. Sydney
is understandably the World City and a much more mature high end apartment market, but the pricing differential is appealing to a Sydney based sophisticated investor, relocating professional or international purchaser who found both cities attractive for different reasons, but opted for Melbourne due to the relative pricing.”

Some would say that Melbourne’s luxury apartment market is entering a golden age, with some of its most outstanding
projects recently completed, under construction or pending release. A new level of sophisticated product is now available, but still representing excellent value in comparison to Sydney’s equivalent.

But who are the purchasers for high-end products such as 35 Spring Street? Sam’s experience has identified three key purchaser profiles seeking higher quality opportunities. The first being those who are new to the city, having recently received permanent residency with commensurate personal wealth. The second being those who are making a generational shift from traditional housing are who are attracted to mansion-style apartment living with the equivalent level of refinement and space to which they are accustomed. The third purchaser type is what Sam calls ‘the transients’, who are emerging as key players in the evolution of the city. These are purchasers who remain partly or fully active in the work environment, settling in the city during the working week and departing to a second residence (either seaside, country or even suburban) on the weekends. Alternatively, there is a growing cohort of purchasers who are no longer working, remain in a second residence during the week and spend the weekend in the city for sporting, entertainment and cultural events. “There is a deepening section of the market willing to spend more than $1.5M million for a 2-bedroom city apartment with the appropriate ambience and amenity that will be used perhaps a couple or a few days per week. 35 Spring Street is perhaps the best recent demonstration, offering 24-hour concierge, exceptionally convenient location, a level of luxury that brings peace of mind to this group, and importantly, a scarcity value attached to the difficulty in replicating the opportunity.”

Apartment 3603 at 35 Spring Street

Beyond the high end product is the bespoke property, whereby a once in a generation opportunity arises to acquire a unique offering that will over time become even further acknowledged for its uniqueness. There is perhaps no finer example than Apartment 3603 at 35 Spring Street. Providing three bedroom, three bathroom plus study accommodation, the residence encompasses an expansive 330 square metres of living space with breathtaking views of Treasury/Fitzroy Gardens, Dandenong Ranges, Melbourne’s fabled sports precinct, bayside and CBD. “Beyond the exceptional accommodation that features two separate living areas, three metre ceilings and floor to ceiling windows are 200 square metres of private terraces, including an exceptional primary terrace extending the length of the apartment perched high above the city and something of a truly global nature” enthuses Sam. The other headline-grabbling feature of apartment 3603 is the inspired layout which offers a “Great Room” that wraps the broad sweep of panoramic Melbourne around a huge formal living space that creates a sense of awe each time one walks into it. Complemented by three car spaces, wine cellar, 24-hour concierge services and access to exceptional amenities, Apartment 3603 is being offered for sale by private negotiation. It is a unique opportunity for an astute purchaser to put a foothold on a property that is of truly global scale, the uniqueness of which will become further recognised as such as Melbourne matures.

To discuss Apartment 3603 at 35 Spring Street, tap into Sam’s extensive knowledge about the market or selling your Melbourne property, please contact mobile +61 407 552 922 or email him directly at sam.nathan@npm.com.au