SC Capital Partners is investing A$40m (€25m) to refurbish a vacant Melbourne office tower it has agreed to buy for A$107m (€66m).

The asset, located in St Kilda Road, is being bought on behalf of the Singapore-based manager’s Real Estate Capital Asia Partners fund series, which target undervalued, under-managed and distressed assets and special situations real estate.

Suchad Chiaranussati, chairman of SC Capital, said vacancy in the St Kilda office market was below 6%, the lowest since July 2001.

He said the market was supported by limited supply and robust tenant demand, and the property was very well-positioned to deliver strong performance.

SC Capital has retained Melbourne-based investment manager Artifex Property Group to manage the asset.

Work would begin on the 19-storey building next year, with the project due for completion and occupation in the first quarter of 2021.