A retail property in Sydney’s Rockdale was snapped up for $5.51 million on a sharp 4.33 per cent yield after a fierce bidding battle on Tuesday.
The 500-square-metre premises at 514-518 Princes Highway, leased to National Australia Bank and two other businesses, sold for nearly $1 million more than the vendor’s expectations, which was on a 5 per cent yield – or about $4.76 million.
It was one of 10 properties that were put under the hammer at Burgess Rawson’s Sydney portfolio auction on Tuesday.
The auction opened at $4 million, and stalled after three bids. But after that, a string of 39 bids streamed in from seven buyers, with a new bidder entering the competition in the last few minutes.
Murmurs could be heard across the room as the new bidder did not hesitate to match his rival’s offer – an “aggressive” tactic which eventually worked, said Burgess Rawson selling agent Simon Staddon.
The new bidder was representing a buyer who was in China but has Australian residency and knew the Rockdale market well, due to his regular travels to Sydney.
Mr Staddon, who sold it with colleague Rhys Parker, said the high price had excluded some interested buyers.
“There were people there who actually didn’t necessarily bid (as they) felt the price was too high,” he said, adding that he had issued 30 contracts.
Prospective buyers included private, high-net-worth investors.
Another bank-leased property that when under the hammer at the same auction was in nearby Kogarah. It sold for $3.5 million on a 4.58 per cent return.
The 417-square-metre asset at 134-136 Railway Parade, occupied by Westpac, was purchased by a commercial property investor based on the north shore, who was also represented by a buyer’s agent.
The pair was up against two others in the room and another interstate bidder on the phone.
An investment partnership paid $970,560 for the Rockdale property in 1997, Domain Group records show, while a family purchased the Kogarah asset for $685,000 in 1996.
Both are on renewed five-year leases to 2022 with options until 2028 and have been occupied by the same tenant for more than 25 years.
Another property auctioned on the day was in Sydney’s Bondi Junction. It sold for $2.59 million on a yield of 4.94 per cent, and had been leased to a medical practitioner for 20 years, with a net income of $127,936, excluding GST.
Nine properties across NSW and Queensland, including two that secured buyers before the day, sold under the hammer at the Burgess Rawson portfolio auction – recording a 75 per cent clearance rate and $28.8 million of property sales.
Three assets, including a bank-leased property in Queensland’s Proserpine, are under negotiation.
The agency’s August portfolio auction had a 69 per cent clearance rate.
“For good quality assets, it’s business as usual. For more secondary stock, there’s probably a bit of an adjustment on cap rates but on A-grade, it’s still tight,” said Mr Staddon, who sold the Kogarah property with Stephen Lovison.
“With 20 to 30 contracts issued on both of those (Rockdale and Kogarah) properties, it doesn’t surprise me because there is still a lack of good metropolitan stock, whatever the market is doing.”