A rare strata shop on the main drag of Australia’s most famous beachside suburb has fetched a price per square metre that pegs it level with some of the suburb’s most prominent trophy homes, as investor demand dramatically outstrips supply.
The 84-square-metre shop at 5/84 Campbell Parade sold for $3.11 million, translating to a price per square metre rate of $37,024.
By comparison, James Packer’s purpose-built bachelor pad at 36 Campbell Parade set a suburb record for Bondi Beach after selling for $29 million in 2018, or $36,250 a square metre.
Both results are well short of one of the strongest recent results along Campbell Parade, the approximately $57,000-a-square-metre figure achieved by the 2016 sale of the Bates Milk Bar site at 124 Campbell Parade – although that property is freehold.
This strata shop was acquired by a Sydney-based investor on a yield of 3.71 per cent.
Interested buyers, including some from interstate, tussled it out for around 14 minutes, bidding in increments as low as $10,000.
Selling agent Nik Simonovic said the rarity of a strata opportunity – often considered an “affordable” option for small-time investors – in Bondi Beach had helped push the price above $3 million.
“As expected, based on strong inquiry levels throughout the campaign, the affordability and rarity factor pushed up the price substantially above the reserve and the yield down to the mid-threes,” Mr Simonovic said.
“Multiple bidders, and phone bidding with interest as far as Melbourne, forced the yield as low as 3.5 per cent and the price close to $40,000 per square metre, which is undoubtedly strong,” said Simon Staddon, a director at Burgess Rawson Sydney, who had the listing with Mr Simonovic.
Mr Staddon said commercial properties in the Bondi Beach area were “in chronic short supply” with a “huge” level of demand from investors on the Burgess Rawson database.
The seller, another private investor, had held the property for “some time”, according to the agents.
The sale was the highest result and tightest yield at Burgess Rawson’s September portfolio auction in Sydney. Twelve of the 16 properties scheduled for auction on Tuesday had sold at the time of publishing, resulting in a preliminary clearance rate of 75 per cent.
Heat returns to childcare sector
A childcare centre in Middleton Grange, currently leased to G8 Education and generating $116,827 per annum, sold for $3.025 million after the underbidder pushed the price up by $550,000 in what listing agent Michael Vanstone described as a “failed knockout bid”.
The dramatic $550,000 bid landed late in the auction and pushed the price from $2.45 million to $3 million in one fell swoop. One further bid of $25,000 secured the property for a Sydney-based investor.
“When you have a strong lease to a strong ASX-listed tenant like G8 in a strong commercial location like Middleton Grange, buyers will compete hard to secure the property,” Mr Vanstone said.
“Middleton Grange is one of those suburbs that has many aspirational families, young families. It’s a massively growing area and it’s a focal point of the local area.”
Mr Vanstone said the yield of 3.85 per cent was “one of the lowest yields we’ve seen for a childcare centre this year” and came close to the record low yield of 3.57 per cent set by a 36-place G8 Childcare centre property in Vaucluse in 2017 (which sold for $4.425 million).
“The yields are getting tighter as the market gets stronger and the interest rates come down – 3.85 per cent is a very tight yield for this type of property and that directly correlates with rates,” he said.
The property received 170 inquiries and 42 contracts were issued.
Other highlights included a combined cafe and upstairs apartment at 8 Carter Street, Cammeray, that sold for $1.61 million on yield of 4.56 per cent.
Outside of Sydney strong regional performers included a Supercheap Auto centre, in Parkes, sold for $2.575 million on a yield of 5.97 per cent, and a furniture store in Kelso (near Bathurst) that fetched $2.01 million on a yield of 7.9 per cent.
The highest yielding property sold as part of the auction was a Broken Hill property leased to retail giant Harvey Norman.
The property is currently generating $108,019 a year in income and sold for $1.09 million, on a yield of 9.91 per cent.
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