NBL magnate Larry Kestelman shoots for high life

Larry Kestelman claims his $800 million luxury Melbourne apartment project is defying the property slowdown.

National Basketball League owner Larry Kestelman. Picture: Stuart McEvoy.

Larry Kestelman claims his $800 million luxury Melbourne apartment project is defying the property slowdown and fears of prices crashing for prestige developments, with the rich-lister only weeks from settlements beginning on his Capitol Grand project.

Kestelman, who primarily made his fortune from the $230m sale of internet services provider and phone company Dodo in 2013, says he has “between 20 and 30” luxury apartments still to sell at his LK Property Group’s Capitol Grand project on the corner of Toorak Road and Chapel Street in South Yarra.

“The ones that need to be sold now are in the $4m-$25m range. They will never be replaced, 360-degree views of Melbourne,” he told The Australian. “You will be living in a six-star hotel-style place with all the amenities and facilities. I want it to be known as the ‘tower of power’.

Capitol Grand, corner of Toorak Rd and Chapel St, South Yarra, under construction. Picture: Supplied

“They will be primarily bought by very affluent people who are not affected by the conversations that are going on about the banks or for that matter international ­issues (regarding restricting sales to foreign investors). They will already have their permanent residency or be locals.”

There are fears top-end properties are being heavily discounted, but Kestelman revealed his company had been showing valuers from the big four banks through the project in the past three weeks in an attempt to allay their fears about prices not matching off-the-plan contracts signed by buyers, which he believes should lessen the chances of any buyers defaulting on their purchases.

“We feel we have very little exposure because of how different and special our product is,” Kestelman says.

“All our buyers look like they are really keen to settle because it is such a big percentage of owner-occupiers they plan to move in, so they want and need to settle.

“So we don’t see there will be big problems for us. But I can also see and feel people’s frustrations with how hard it is to get loans, so we have a full concierge team in LK Property which talk to and help our buyers.

“So if there is anyone who is having an issue with their lender, they come to us and we put them in touch.

“We have a variety of lenders, starting with the four major banks for majors but also dealing with people like La Trobe Financial, Pepper Money and HSBC and Dreamstreet Lending.”

Settlements will begin next month on the 90 apartments in the smaller 10-storey tower at Capitol Grand, with the first 15 floors of the more luxurious adjacent 50-storey tower starting in April and the remainder of the building progressively by the end of the year at the latest.

A David Jones gourmet food store should be open by about November, Kestelman says, anchoring what he plans will be three levels of luxury retail including restaurants and bars fronting the street level of the building.

Kestelman says “you could throw a blanket over our buyers who are in about a 4km radius” given many come from nearby suburbs such as Toorak, Brighton, Malvern and Armadale, and that he and his family will take the top two floors of the 50-storey project.

“I will be the last to move in, and I think it will all be 100 per cent done by the first or second month of the year. Then we have a grand opening, including all the retail,” Kestelman says.

“I’m trying to build a community of like-minded people that live in a safe and secure environment, in a style that they want to live in.

“I think the idea of property downsizers is not a new one, but usually that entails you selling an average house for an average apartment. What this is, is for ­people who are used to living in luxury not having to downsize. I want you to step up in luxury, not down.”

Kestelman — widely known for his control of the National Basketball League — also has a diverse range of investments and private companies held under his LK Group banner, including executive search firm First Avenue, calendar marketing business ECal, private equity investor Queens Lane Capital and a Philippines call centre.

Separately, the outsourcing business Acquire BPO has annual revenue of more than $150m and made a pre-tax profit of $15m last year.

He owns commercial property, having sold a building on Melbourne’s Queens Road for $60m last year after buying it for $21.4m in 2014, and is among the top 20 shareholders in the listed Vocus Group, which now owns Dodo, and clothing and apparel manufacturer The PAS Group.

Vocus shares are up about 11 per cent since January 1, though are still worth about 60 per cent of the record high they were trading at in May 2016.

PAS Group shares, meanwhile, have fallen 25 per cent this year.