September 8, 2015

Japanese industrial conglomerate Sumitomo has expanded its land holdings in Melbourne’s north, buying out Evolve Development’s Annadale housing estate in Merrifield.

Sumitomo Forestry Australia, which took a 50 per cent stake in local home builder Henley Properties in 2009, struck a $50 million deal. It will take over development of 1060 lots in the estate.

Annadale Estate will form part of the new Merrifield suburb in Mickleham in Melbourne’s rapidly growing northern corridor where many of Australia’s largest house and land developers including Stockland and Villawood have established footholds.

Evolve Development is controlled by Melbourne businessman Ron Walker and property developer Ashley Williams. Annadale was a joint venture between Evolve and Gersh Investment Partners founder Joseph Gersh.

Mr Williams, who confirmed the deal, said Evolve had developed much of the estate’s infrastructure and was settling the first 115 lots.

“They’ll take over the balance,” Mr Williams said.

Annadale was a “well performing project in a strong growth corridor”, which had been “de-risked” from a delivery point of view, he said.

Sumitomo has another housing estate under the Henley Properties banner in Mernda, also in Melbourne’s north.

The 300-year-old parent company, Sumitomo Group, has extensive Australian interests in chemicals, non-ferrous metals, auto machinery, plastics and fertilisers which suffered heavy losses of $56 million last financial year.

Industry sources suggested Sumitomo fended off other developers including Perth-based Satterley Property Group, AV Jennings and Peet by offering the hefty $50 million premium.

MAB Corporation’s super-sized residential, business park and industrial development is next door to Sumitomo’s newly acquired estate on the other side of Donnybrook Road.

Evolve will maintain a presence in the area, retaining ownership of The Woods estate, a 450-lot housing project adjacent to Annadale.

The group will also ramp up a new project, Summerhill Living, in Epping North.

The Annadale sale came soon after Evolve offloaded a $350 million in-fill development in Williamstown, called Waterline Place, to AV Jennings.

Waterline included a mix of 850 townhouses and apartments as well as retail space.

Sumitomo’s expansion in Australia is part of a push to counter shrinking home markets in Japan. It also has operations in the US, China and South Korea.