A private fund has snared a string of nine retail properties and a parking lot in Sydney’s Rozelle for $10.5 million.
The properties, which are attached to a two-year-old development at 118 Terry Street, sold on a 6.8 per cent yield, less than a week after passing in at auction.
Part of the Union Place complex, the properties were owned by Sydney-based Anka Property Group, led by the Boyarsky family which developed the project.
The listing received about 100 inquiries throughout the campaign, later narrowing down to four final buyers who Colliers International selling agents James Cowan, Miron Solomons and Henry Burke were negotiating with.
Two of these groups were private funds and the other two were high-net-worth individuals. They were all attracted to the complex’s tenant mix, proximity to the CBD and especially the 200 apartments above the retail component, 70 per cent of which are owner-occupiers.
While one of the shops is still vacant, the remaining eight are leased with a net passing income of $714,027, but this could shoot up to $815,000 when the new owner secures a tenant.
Mr Cowan said strata retail investments with good tenants were “a long-term hold where you can just pretty much collect cash”.
“The (strata) market is always strong, and the reason why people like strata is the fact that it’s always a few percentage points (in yield) above freehold, so you’ll always get a much better return,” he said.
“I think the market will continue in growth just because there is that big buffer between freehold and strata, so any interest rate rises won’t necessarily affect pricing.”
Mr Cowan added that there was an undersupply of retail in the Rozelle-Balmain area, as more housing is added to that market.
“The inner west is booming; there’s all these residential developments popping up (but) there’s really low retail allocation, so it’s creating quite a demand for strip retail in suburban locations,” he said.
“Seventy per cent of the (Terry Street) building are owner-occupiers, which means young families with high disposable incomes. It was its own little retail precinct, so you’ve got 200 families in the development, let alone all the other surrounding developments.”