28 May 2019
Words Larry Schlesinger Australian Financial Review

Deague family selling management rights to 400 apartments

The Deague family has put the management right to its Melbourne Village residential development up for sale, with price expectations of between $8 million and $10 million.

The 529-unit development across two towers of 21 and 27 levels in West Melbourne is currently under construction and due for completion in early 2020.

Around 80 per cent of  units - 496 apartments and 33 townhouses - will be owned by investors, creating a letting pool of more than 400 units.

Management rights, which allow an onsite manager to earn fees from letting out apartments and managing day-to-day services, have long been a feature of the Queensland apartment market, but are growing in popularity in Victoria. This is in part due to the growing prevalence of Airbnb and other short-stay operators in residential apartment towers.

The rights package for Melbourne Village comprises a 25-year letting and caretaking agreement.

Deague Group chief executive officer Will Deague said Melbourne Village was the "perfect product [for management rights] in the current market".

"Two towers, over 500 apartments which are the right size to lease out for long and short-term leasing," Mr Deague said.

Tim Crooks and Alex Cook from Resort Brokers Australia are handling the expressions-of-interest campaign on behalf the of Deague Group.

Mr Crooks, who earlier this year negotiated the $15 million sale of management rights at Melbourne skyscraper Australia 108 to Song Properties, said developers were "delighted to see Airbnb dramatically reducing their presence in their properties".

"This means no damage to common facilities or disgruntled owner occupiers whilst developers are still able to offer a short-term return to investors via the corporate market," he said.

He said several operators had expressed strong interest in securing the management rights to Melbourne Village.

“Based on our last four successful management rights campaigns in Victoria, we are expecting to finish with some high-quality submissions,” Mr Crooks said.

“We’ve had interest from serious contenders, including major investment syndicates and large management rights operators with extensive portfolios.”