Commercial properties in regional and coastal towns on the eastern seaboard were in high demand at Burgess Rawson’s latest Sydney portfolio auction on Tuesday, with assets selling for only a shade below those in the big cities.
The standout sale proved to be a Commonwealth Bank branch in Batemans Bay, on the NSW south coast, for $2.34 million – $690,000 more than it fetched when it last traded hands in 2014. It came close to the price served up by the sale of a Pizza Hut branch in Waterloo, in Sydney’s inner south, at $2.56 million.
“So many investors have been happy to pay strong prices in regional and coastal locations since COVID-19, but this was a real indication that those prices are now making a real breakthrough,” said Michael Gilbert, Burgess Rawson’s sales director of investment property.
“There wasn’t much difference in some of the prices paid in regional Australia, and the prices paid in Sydney. There’s a lot of appetite now for regional NSW and people feel very comfortable with properties there. Results were good for both.”
Mr Gilbert was speaking at the end of the company’s third flagship portfolio auction of the year held at the Sydney Opera House, where 12 out of the 13 properties offered sold, representing a 92 per cent clearance rate.
With 70 to 80 bidders in attendance and many hundreds more watching online on the morning before the federal budget was delivered, most properties achieved healthy prices above their reserves, which agents put down to the continued strength of good properties with premium brand-name tenants, and confidence in the Australian economy.
In Uralla, a town on the NSW northern tablelands, a BP service station sold for $2.03 million, on a 9.01 per cent yield, while in Armidale, 20 kilometres away, a Harvey Norman store sold for $3.45 million, on a 6.44 per cent yield.
“I think with an interest rate that’s so low, there’s huge demand for these quality leased properties,” said Rhys Parker, Rawson Burgess associate director in charge of the Harvey Norman sale. “That was a really good large-format retail property that’s a landmark in Armidale and had a comprehensive offering of furniture and technology and all the usual goods.”
Elsewhere in NSW, Centrepoint Arcade in Kempsey, on the mid-north coast, sold for $2.905 million, on a 7.47 per cent yield, a mixed-use building in Grafton, in the northern rivers area, sold for $890,000 on a 7.48 per cent yield, while in Narrabri, in north-western NSW, a Ford dealership was snapped up for $1.92 million, on a 7.5 per cent yield.
Back in Sydney, the demand for commercial property was equally strong. On the lower north shore, an LJ Hooker Atlas office in Neutral Bay sold for $4.28 million, on a 5.69 per cent yield, while in the western suburbs, a development site in Seven Hills was snapped up for $3.101 million.
With the budget front of mind, a childcare facility in Brisbane that opened only last year during the pandemic was put up for sale. The Kids Club Childcare in Kedron, in the northern suburbs, fetched $5.7 million, on a 6.09 per cent yield, probably bolstered by the federal government’s $1.7 billion overhaul of the childcare system, cutting fees for many parents and increasing the childcare subsidy.
“That centre went really well,” said Michael Vanstone, Burgess Rawson NSW associate director of childcare.
“Childcare properties are in big demand at the moment, at the top of people’s hit list for commercial property because the government is keen to support it to increase female participation in the workforce.”
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