This article is from the Australian Property Journal archive
THE Melbourne CBD home of Denis Lucey’s popular restaurant Bottega has sold for a tasty $7 million-plus and sub-3% yield, following an expressions of interest campaign that attracted more than 250 enquiries.
A local investor acquired the two-level building in the city’s east end at 72-74 Bourke Street at a price well above the initial expectations of more than $5 million, in the latest in a string of CBD building transactions in the sub-$15 million range.
Recent weeks saw the marathon auction of the five-level mixed-use building at 220 Bourke Street, which generated 661 bids over two hours and eventually resulted in a $15.205 million sale, more than $4.2 million above reserve and at a sharp 2.99% yield.
Savills’ Clinton Baxter, Nick Peden and Benson Zhou brokered the deal on behalf of a group of investors that includes celebrity chef and My Kitchen Rules judge Guy Grossi.
The building, on a 198 sqm site with an eight-metre frontage, was initially expected to bring $5 million. Bottega has been operating from the site since 2002 and recently signed a long-term lease extension. Current return is $211,940 per annum.
Baxter said more than 250 parties showed interest in the property, and 15 formal offers were lodged from local and offshore buyers.
“Numerous international bidders competed for the property, only to be out-muscled by a local investor with existing CBD property holdings,” he said. “The scarcity of Melbourne CBD properties on the market, particularly below $10million, is apparent among active buyers, resulting in significant pent-up demand,”
“Melbourne is now firmly on the global investment stage, money is flooding in from offshore, and this sale indicates local investors can compete successfully against Asian buyers, provided that they accept that a premium price is required to secure CBD assets,” Baxter added.
Savills is anticipating an active 2018 due to increased buyer demand for Melbourne commercial assets, the strength of the CBD market, and the city’s increasing population growth.
The Art Moderne 220 Bourke Street brick freehold of 1,170 sqm is on a 201 sqm site, and has four storeys and a basement level occupied by residential and commercial tenants. Originally the Old England Hotel, it was designed in the 1930s by prolific Melbourne architect, Harry A Norris.
Cotton On Body is the major tenant and returns $453,950 per annum net. Eight bidders competed for the asset, which was put to the market for the first time in more than 80 years, and attracted over 300 people to the lunchtime auction.
Another two-level building, at 288-294 Russell Street, reportedly sold for more than $5 million after 54 years of ownership within the family of businessman Gerald Alexandratos.
Formerly a pub, the 338 sqm site of the Alexandra Building now comprises five shops and four office spaces, and brings $202,150 per annum with redevelopment potential.
In March, a Chinese party paid $10.5 million at a 3.94% for the three-level 550 sqm building at 185-187 Lonsdale Street, home to iconic Greek eatery International Cakes and nightclub Storyville.
The former home of the Royal Antediluvian Order of Buffaloes, next to Guildford Lane, off La Trobe Street, was recently picked up by developer and hotelier Ozzie Kheir for $6.25 million.
Australian Property Journal
