This article is from the Australian Property Journal archive
A NORTH west Melbourne KFC outlet has sold for $7 million, on the sharpest yield recorded nationally this year to date for an asset of its kind.
The off-market sale of 91-101 Keilor Road in Essendon reflected a 2.4% yield, the lowest for a freestanding KFC in 2023.
While the property has commercial 1 zoning, allowing for future mixed-use development, the site is securely leased to one of the biggest KFC operators in Australia with total tenure including options through to 2048.
Savills negotiated the sale.
“Between the property’s excellent visibility and prominent positioning on Keilor Road, easy accessibility to transport links and a long-term tenancy in place, this property represents an excellent investment in what is typically a very tightly held retail market,” said Rick Silberman of Savills.
“At times, we tend to talk about the commercial property market in very broad terms without considering that there are certain sub-sectors within the market that remain as strong as they have ever been, one of which are fast-food freehold investments. The sale of KFC Niddrie is a perfect example of this.”
Savills’ Stephen Bolton said that despite the frustration often seen from buyers searching for good retail opportunities, the sale of KFC Niddrie is “proof there’s still capital available in the market for quality stock”.
“Demand remains strong for well-located assets with secure long-term prospects.”
The property, which is directly next door to McDonald’s, has a current lease in place until April 2028, with two further 10-year options and provides a net income of $167,726 per annum.
Bolton said the property metrics and fundamentals of KFC Niddrie sit squarely in the “sweet spot” for retail investors looking for secure and defensive assets that have proven to be resilient throughout changing conditions in the market.
