A pair of western Sydney strata retail shops was snapped up consecutively for more than $3 million under the hammer, with the smaller property fetching a land rate of more than $18,000 a square metre.
The 63-square-metre sushi shop at lot 3, 531-537 Victoria Road, Ermington, sold for $1,165,000 on a 5.19-per-cent yield at Burgess Rawson’s final portfolio auction of the year. It generates more than $60,000 a year.
Meanwhile the 202-square-metre property at lot 4, leased to a chemist, netted $2.21 million on a 5.09-per-cent return with its $112,700 annual rental income.
Both come with five-year leases until 2022 with a five-year option and fixed 3-per-cent annual increases.
The sushi shop last sold for $800,000 in 2014, Domain Group records show, and the larger chemist last traded for $1.4 million in 2013.
Burgess Rawson selling agent Dean Venturato, who had the listing with Tom Doran, said the “good price points” and location helped drive the sales.
“It’s a very strong little shopping strip there; there’s no vacancies and (there’s) a long, long history of full occupancy there. There’s just a high population base around that small shopping strip that keeps it very, very full and attractive to investors,” he said.
While the two assets sold to separate private investors, several buyers bid on both properties in hopes of acquiring in one line.
The pair of shops attracted about 120 inquiries and 40 contract requests across both listings, with many interested in both.
The vendor, which owned both lots, was selling their “smaller assets to buy into something larger”.
Mr Venturato said the popularity of strata retail properties was inconsistent.
“Some strata shops seem to attract a lot of interest and sell at low cap rates and you expect that pattern to apply to others, but it’s very specific to location and tenant and dollar value, so what’s more appealing is a really strong retail location with good tenants on long leases.
“If you lack those ingredients, it doesn’t mean they don’t sell, it just means that they’re only going to be favourable at higher returns – we saw that at Narrabeen today, there were a couple of shops in Narrabeen (that were) probably half a per cent softer in cap rates than what the Ermington ones sold for.”
Mr Venturato added he was “happy” with the performance of the final portfolio auction of the year, where nearly $45 million of properties sold.
“Generally, the last one of the year tends to be good, people do get worried about Christmas and buyer focus being lost closer to Christmas. We always find that this first week of December is still quite acceptable – we sold 65 per cent today,” he said.
“I think it was a good result given some uncertainty out there, some difficulty with buyers being able to achieve the finance outcomes that they seek.”
The two commercial properties were among 20 assets that went under the hammer at Burgess Rawson’s December portfolio auction, which recorded a 65 per cent clearance rate.
One single bid nabbed a three-storey commercial complex McNamara House in Orange for $11 million – the top sale at the event. It sold on a 7.7 per cent return.
Another property that was snapped up was a 12,707-square-metre industrial facility in Canberra’s Hume for $10.3 million on a 5.24 per cent yield.
And in western Sydney’s Hoxton Park, a BP service station with an attached Oporto fetched $8.3 million on a 5.3 per cent yield.