This article is from the Australian Property Journal archive
CAR dealerships have emerged as an active subsector of the Melbourne property market, with the $32.6 million sale of the Chadstone Ford and Hyundai dealership selling on a record yield of 3.32%.
Located 13 kilometres south east of the CBD, the site includes a Hungry Jack’s restaurant which, together with the dealership, recently renewed its lease on a 10-year lease with a five-year term.
It was divested by Preston Motors, managed by CEO Robert Gattereder – who sold the Ford and Hyundai dealership business last year – and was purchased by a mainland Chinese investor.
Benchmark yields have been achieved for both Victorian dealerships and fast food assets, according to selling agents Burgess Rawson and Gross Waddell ICR, usurping the 3.37% achieved in the $6.42 million sale of a Hungry Jack’s in Campbellfield at a recent Burgess Rawson portfolio auction.
The agents handled more than 260 enquiries resulting in 13 bids for the 6,953 sqm freehold investment with commercial 1 zoning.
Burgess Rawson’s Billy Holderhead said investor appetite in the car dealership sector was stronger than ever, drawing considerable interest from the top end of the market.
“This is mostly due to large scale landholdings with high profile exposure, secure income and favourable planning controls ensuring significant future development.”
He said the top three bids for the site were all submitted on clean, unconditional contracts. Final contracts with the purchaser were exchanged six days after expressions of interest closed.
Burgess Rawson recently sold the Sunbury Ford dealership outside of Melbourne for $9.61 million, reflecting a yield of 5.20%, while in the eastern suburbs the operators of one of Australia’s largest Mazda dealerships paid $15 million earlier this month to buy the 8,878 sqm land and showroom in Ringwood, at 4.37%. At the same time, the home of Australia’s first Toyota dealership, currently used as an Australia Post distribution centre, was sold for $23.5 million to a Chinese-backed developer.
Gross Waddell ICR’s Danny Clark said private competition was strong between private investors eager to activate “dead money” sitting in the bank.
“There’s a lot of frustrated capital in the market,” Clark said.
“Borrowing costs are at record lows, but that is not what’s driving it. Low yields, on long-term ‘set and forget’ lease structures, still perform better than 0.5% returns in the bank.”
The auto sector is booming with consecutive months of growth, with half-yearly results revealing cumulative September 2021 sales up 34% year-on-year.
“Record profits and a high volume of car sales have combined with supply issues to create the perfect storm for the sector,” Clark said.
Preston Motors was advised on the deal by Mark Wizel, Managing Director of Advise Transact. Burgess Rawson’s Holderhead, Jamie Perlinger, Zomart He and Beau Coulter, marketed the property with Gross Waddell ICR’s Clark, Michael Gross and Alex Ham.
Meanwhile, also in Ringwood, the Etheridge Ford dealership has been listed for sale through Burgess Rawson and CBRE. The 14,084 sqm property is offered as a landbank opportunity, with a renewed seven-year lease with no options and a low 25% site coverage and commercial 2 zoning.
CBRE is also marketing the home of ASX-listed Eagers Automotive in Frankston on behalf of Gary Lechte, with $20 million expected for the 11,200 sqm bayside site.
Operating as Bayside Chrysler Jeep Dodge, the 126-130 Dandenong Road landholding is being sold with a triple net lease that returns net annual income of $1,133,474 per annum.
