Investors with deep pockets are starting to scour regional areas for properties to offset many underperforming assets in the capital cities, agents say.
In Toowoomba, one of the biggest regional centres in Queensland, property funds and high net worth investors are already showing interest in a large warehouse and office facility that is being sold with a long lease to an established local company.
Daniel Cullinane and Markus Eames, of LJ Hooker Toowoomba, are selling the 2013-built property on a sale-and-leaseback arrangement on behalf of the FKG Group, a construction, civil engineering and services business that uses it as their headquarters.
“We’ve already had southern inquiry from high net worth individuals,” Mr Eames said.
The property, at 275-283 McDougall Street, comes with a lease until 2029 with options until 2047, and would generate $1.55 million a year in rental income.
“FKG are a family-owned business who want to reallocate the underlying capital into other projects,” said Mr Cullinane.
The property, described by Mr Eames as a “COVID-safe investment”, is tipped to fetch about $25 million.
The fact that FKG’s core businesses revolved around industries relatively untouched by the COVID-19 pandemic, such as mining and infrastructure development, was one of the drawcards, the agents said.
The 3.5-hectare site includes a gross floor area of 7011 square metres and 178 car parks.
Buildings include a main office, warehouse, 16-room accommodation block, childcare centre and gym.
Mr Cullinane said it was one of the larger properties on the market in Toowoomba.
Trend towards regional investment
The agents expected Queensland’s regions to benefit from their reputation as stable economies during the COVID-19 pandemic.
“They [investors] are swinging back to regional markets at this time,” Mr Eames said.
“There’s a lot of demand from property funds and individuals to place capital somewhere [outside of the major cities].
“There’s a lack of good quality, blue-chip stock out there in the market at the moment.”
Toowoomba in particular, with its exposure to the mining, agriculture and manufacturing industries, was seen as an ideal location to invest according to Mr Cullinane, who said many fund managers now had a “mandate” to explore regional opportunities.
“It’s a really good place for people to hedge their bets,” he said, adding that the city’s distance from the capital city was now among its strengths.
“People have got to travel one-and-a-half hours from Brisbane [to get to Toowoomba]. On that basis, COVID has got to travel one-and-a-half hours.”
Direct flights into Toowoomba’s Wellcamp airport were also seen as a benefit for investors.
“Pre-Wellcamp airport, it was very hard to get people to come up to Toowoomba,” Mr Eames said.
“People say that it’s all about the numbers, but [for many investors] to get their eyes on the asset to touch and feel an asset is very important.”
The planned inland rail project would also have a positive impact on the region, the agents said.