'Slice of Asia' in Adelaide sells on razor-sharp 2.5 per cent yield
A two-storey commercial building in Adelaide’s Chinatown has sold under the hammer for $4.95 million on a razor-sharp yield of 2.5 per cent.
The unprecedented low yield indicates the strong appetite for property with development upside in the Chinatown precinct, which spans little more than three streets in the CBD and has zoning allowing for a maximum building height of 43 metres.
A recently inked 5+5+5-year lease deal with a Japanese restaurant on the ground floor means the buyer – an investor with other property interests in Adelaide – took a long-term view to the investment.
“It’s certainly not a yield that is the new level of Adelaide,” said selling agent James Juers of McGees. “It shows the keen desire of people with a long-term view for property in this location – not ‘we’ll have this for 10 years and flick it on’.”
The 480-square-metre site at 9-15 Field Street was sold with six tenants and one vacancy, on a passing net income of $124,582 per annum.
Bidding opened at $3 million in front of a crowd of about 100 people, and moved in substantial $50,000 and $100,000 jumps.
“We weren’t surprised by the interest,” Juers said. “We were surprised with the price at the end of the day.
“We wouldn’t have got this if we went to an expressions of interest or tender.”
The property had been held by the same family for 39 years, which is typical of the small Chinatown precinct, where properties are tightly held and highly sought after, with few changing hands each year.
In June, a Gouger Street property on a new 7+7 year lease to Gyoza Gyoza sold for $5.25 million through CBRE.
McGees selling agent Yee Ng said the $400 million Central Market Arcade redevelopment was an example of significant investment being pumped into the area.
Meanwhile, the new 16-storey, $200 million Marriott Hotel is scheduled to open its doors next year. And, on nearby Grote Street, the $25 million La Boheme apartment development has been approved.
The results of last Thursday’s Field Street auction have been hailed as a vote of confidence in the commercial market of the South Australian capital.
“It shows that Adelaide is still pumping along,” Juers said. “Are we seeing it strengthen? No. But we’ve seen no signs of the market slowing down in the commercial sector.”
