Looming federal election scares off buyers at commercial property auction, agents say
A large-format retail store with adjoining warehouse space on the NSW Central Coast and a Cairns retail complex were the only properties to sell under the hammer at the Burgess Rawson portfolio auction on Tuesday – the second this year to record a sub-50 per cent clearance rate.
The two properties were among 10 that went under the hammer on the day. An additional four properties were sold prior to auction, which gave a total clearance rate of 43 per cent. Burgess Rawson is also hopeful of selling six other properties that passed in on the day.
The last Sydney portfolio auction, held in February, delivered a clearance rate of 44 per cent.
A Burgess Rawson spokesman said that the impending federal election, expected to be announced as early as this weekend, was likely playing on investors’ minds.
“Concerns over a change in federal government is causing stagnation,” he said.
Speculation about whether the Reserve Bank would shift interest rates lower and signs of restricted access to finance were also quelling short-term appetite as investors looked “for signs as to the state of economy”, he said.
The site of the 4 Pines brewery, in Manly, was passed in at the auction on Tuesday. Photo: Supplied
“Talk of interest-rate drops will assist buyer desire to buy, but it underscores a softer economy,” the spokesman said, adding that “obtaining finance is becoming a greater challenge for some buyers [and] this is causing a lower participation rate from willing buyers.”
The industrial and retail property in Tuggerah, on the NSW Central Coast, is currently leased to Dulux paints and sold for $2,272,000, on a yield of 5.87 per cent.
The property is leased until 2023, with options until 2033, and is currently generating a net annual income of $133,400 plus GST.
The Dominos-anchored property in Cairns sold for $1.95 million to a Townsville buyer, bidding via telephone, on a yield of 8.7 per cent.
Located in the Cairns suburb of Manoora, the freehold property is fully leased with four tenants and is currently generating an estimated net annual income of $165,207, excluding GST.
The four properties that sold prior to the auction included two ground floor retail shops in Rozelle, in Sydney’s inner west, which form part of a mixed-use development.
Six other properties that passed in at the auction, including a purpose-built medical facility in Sydney’s Frenchs Forest currently occupied by the Northern Cancer Institute, were still subject to negotiation at the time of publication.
“We had some very close offers and we’re hopeful of translating these into sales in the next day or so,” the spokesman said.
In what could be a sign of waning enthusiasm in the pub sector following years of feverish growth, a Manly pub leased to the Four Pines Brewing Co., which had been expected to achieve a result of $4 million-plus, failed to secure an opening bid.
