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A tiny café in Sydney’s Chinatown area could sell for one of the highest prices for a retail property in the fringe CBD area when it goes to auction next month.
The agents are being flooded with interest for the 35-square-metre property at Shop 9, 61-79 Quay Street, Haymarket, which they expect to sell for more than $2 million – equivalent to $57,142 a square metre, on the lower end of that estimate.
Selling agent Jon Race, from Khoury and Partners, said the owners had bought it for $1 million in 2014 – meaning the value of the property could more than double in three years if it sells for the expected price at its auction on October 5.
“Haymarket has just gone ballistic,” Mr Race said.
“I’m getting 600 calls a day on this shop and people are wanting to submit (offers) before the auction.”
Mr Race attributed the interest to the location close to the University of Technology Sydney, foot traffic and the leasing covenant, which has a 10-year lease term with a five-year renewal option.
“It’s because of the location, you have so many foreign students attending the university there,” he said.
“If you stand there and watch how many people walk down there a day, there’s tens of thousands of people walking past daily.
“The way the city is going and what they’re predicting with the rental rates, things are going to skyrocket.”
Co-agent Andy Hu, from Knight Frank, said the strata retail and freehold property market is “very tight” in Haymarket.
“You barely see those small retail shops for sale,” Mr Hu said, adding that only four or five prime retail shops traded annually in the entire CBD.
“The Chinatown market demand is very high; I constantly get enquiries especially from Chinese clients (based in Australia).
“They see a lot of growth there… (with) the Darling Quarter and other Lendlease (residential) projects there, so they believe in the future, this area will get busier and busier.”
The capital value of commercial property in Haymarket is increasing at a faster rate than the rest of the CBD due to yield compression, Mr Hu added.
“For the CBD, 5 per cent is the guideline yield, but in Haymarket, a lot of transactions are below or at 4 per cent.”
It’s not only inner Sydney spots where smaller retail assets are growing in popularity.
In March, a 46-square-metre beachside fish-and-chip shop in Bronte, in Sydney’s east, sold for $2,385,000, securing $51,847 per square metre. Outside of Sydney, an Italian eatery Saluministi, in Melbourne’s CBD, runs out of a shop as small as 18 square metres, paying $43,000 a year in rent.