This article is from the Australian Property Journal archive
This week’s interest rate cut by the Reserve Bank of Australia has reinvigorated the market with commercial property investors snapping up $60 million worth of offerings under the hammer and prior to back-to-back portfolio auctions held in Sydney and Melbourne this week.
Tuesday’s Sydney event saw a 100% clearance rate across seven properties and $24 million worth of assets sold at an average of $3.428 million, on an average yield of 5.82%.
Properties attracted a high 56 bids on average.
The Melbourne event held at Crown Casino yesterday saw $37.47 million of offered properties sold at an average of more than $5.35 million, helped by the $12.5 million pre-auction sale of a Pakenham industrial facility occupied by precast concreting brand Civilmart.
The asset, in Melbourne’s outer south-east, is on 34,710 sqm of industrial 1-zoned land and has a 10-year lease through January 2028 plus four 10-year options that currently brings $413,269 per annum plus GST.
Civilmart was recently by Irish giant CRH, a Fortune 500 company listed on the New York and London Stock Exchanges.
Also sold prior to auction was a brand-new 7-Eleven fuel and convenience station, perched between future McDonald’s and KFC restaurants in the new outer south-west Melbourne suburb of Mambourin, for $6 million.
7-Eleven has a new 13-year lease plus options over the 2,028 sqm corner freehold, with current return at $353,100 per annum net plus GST.
Among the properties selling on the day was a Nido Early School childcare centre in Perth’s outer south-east for $5.56 million. Nido as a new 15-year lease with three further 10-year options over the facility, licenced for 87 places and returning $349,950 per year net plus GST.
The biggest sale price at the Sydney auction was a multi-tenanted South Lismore showroom and warehouse property, which fetched $5.050 million. On 7,906 sqm of land, the property has three buildings with tenants on long leases including national dairy and agricultural products supplier Norco and distribution chain solutions company Winc Australia. Net income is $410,659 per annum plus GST.
Childcare centres sold on sharp yields. The Goodstart Early Learning Wavell Heights in Brisbane was the first property offered, and it sold for $4.12 million, on a circa 3.72% return. The modern 75-place centre has a 15-year triple net lease to 2035 plus 10-year options, currently bringing around $153,303 plus GST.
The Goodstart Early Learning Redcliffe sold immediately afterwards. Billed as an entry level opportunity, the 45-place centre sold for $3.031 million on a yield of around 3.63%. It has a 20-year triple-net lease to 2040 plus options to 2060, and returns $110,159 per year net plus GST.
This week’s Burgess Rawson auctions coincided with the Reserve Bank cutting interest rates for the first time in four years.
The commercial property market has hailed the move as a turning point.
Advise Transact managing directors Mark Wizel and Lewis Tong said said the biggest beneficiary of the interest rate cut will be on buyer sentiment for well leased investment properties under $20 million.
