Investors hungry for fast-food restaurants, medical suites at Burgess Rawson's Sydney portfolio auction

There were 21 properties that sold under the hammer, or by negotiation just afterwards, out of a total of 25 – well up on the number being offered this time last year. The clearance rate was 81 per cent. Four were sold prior.

The properties ranged in price from $650,000 up to $9 million, and brought in a total of $60 million for the day.

The Yallamundi Rooms at the Opera House were only permitted to seat 120 because of the COVID-19 restrictions, so everyone took shifts according to which properties they were most interested in.

A crowd gathered outside the room, with a constant stream of people leaving and coming back in. Dozens more attended digitally, and made bids, on the auction app or by phone.

First up were four medical centres, two in Liverpool, in Sydney’s south west, one in Gosford on the Central Coast and the fourth, a dentist’s surgery in Cooks Hill, Newcastle. All sold on yields of less than 5 per cent, with some fielding 150 inquiries or more before the auction.

Medical centres and those of allied health professionals are currently enjoying a huge spike in popularity, largely as a result of being seen as a COVID defensive asset and in a time of an ageing demographic.

The Liverpool medical centre’s suite 5 – occupied by a mental health charity –  sold for $1,265,000, on a 4.9 per cent yield, while suite 6 in the centre – the home of surgeons who’ve been there for 10 years and just taken a further three-year lease and an option for another three – sold for $1.16 million, on a 4.6 per cent yield.

Further north, the Gosford Medical Centre fetched $710,000, on a 4.76 per cent yield, and the dentist’s surgery in Cooks Hill sold for $640,000, a 4.45 per cent yield.

“Anything medical is really, really popular at the moment,” said Michael Gilbert, director sales at Burgess Rawson. “The ones in Liverpool did very well as Liverpool has a really strong growth story about it, being in the area of the airport and very much turning into the third CBD of Sydney.

“Its hospital is expanding, and there’s been a lot of education expansion too. Both of those centres had good, long-term tenants in a medical precinct that’s very well sought after.”

One of the best-peforming properties on the day was the KFC at Forster on the mid-north coast of NSW, which received more than 350 inquiries and more than 100 bids. It sold for $2.83 million, with a record yield of 2.93 per cent – much lower than the 4 to 5 per cent such properties usually offer.

Many of the disappointed bidders then tried for the KFC at Mudgee, with a 4 per cent yield, and a shorter lease term. It went for $3.7 million at a 4.98 per cent yield. The Subway at Windsor also sold well over reserve, for $1,045,000 at 4.47 per cent.

Another stand-out result was for a Liberty service station in Tanawha, in Queensland’s Sunshine Coast hinterland, which was sold for $2.42 million, topping the reserve by $270,000.

“It had a long, 15-year lease and was a Liberty brand which is a local hero because it offers the cheapest fuel,” said Kieran Bourke, director of agents Burgess Rawson Sydney.

“But generally it was a very strong day as there’s a lot of interest in commercial property among investors now because of low interest rates and the Sydney residential market is so hot. Many buyers are missing out on residential, or are not wanting to pay too high a price, and are not getting too good returns.

“So they’re coming into the commercial sector because many properties have longer leases, ongoing rent increases per year and tenants normally do their own fit-out and maintain premises well.”

Other properties sold included an industrial site at Somersby on the NSW Central Coast for $3.6 million, an industrial site at Bateman’s Bay on the NSW south coast for $3.5 million and an office building at Coffs Harbour, leased to an online education company whose shares trebled in the last year, for $3.15 million.