- The 145th commercial portfolio auction saw 40 assets sell for $156M
- Overall, the success rate was 82%, as demand outstripped supply 6 to 1
- Strict Covid-19 measures were used for the in-person auctions
Burgess Rawson‘s 145th monthly commercial portfolio auction took place in Sydney and Melbourne this week, with a combined $156 million of property (40 properties in total) selling over the two days.
The Sydney auction on Tuesday saw sixteen of the twenty-one clearing for a total of $33.7 million, while Melbourne sold 24 properties for $122.3 million yesterday.
Overall, the success rate was 82%, as 172 investors walked away unsatisfied with an estimated $748 million of undeployed capital. Overall, demand outstripped supply in the rooms by a factor of six.
Over in Sydney, the hero sale of the day was a KFC restaurant in Forster NSW. The fast food and beverage tenanted asset received more than 350 enquires and 100 contract requests prior to auction and was fiercely bid on during the auction with the buyer snapping up the property for $2,830,000 on an extremely low yield of 2.93%.
In addition, the St George Bank at Bega was bought prior to auction and a further four properties are currently under negotiation.
Burgess Rawson Director Kieran Bourke said the interest for entry-level assets showed how many investors are turning to the commercial property market for solid investment opportunities.
“In addition to the interest we received for the Forster KFC site, we received over 150 enquires for our other entry-level investments on offer today including the Dental Clinic at Cooks Hill, the Subway at Windsor and the medical centre in Gosford.”
“The full capacity auction hall and record levels of enquires received highlights the sheer demand for commercial property as investors are realising the strength the market offers for ‘set and forget’ investment opportunities.”
Kieran Bourke, Burgess Rawson Director
Over in Melbourne, the day started with a brand new KFC at Berrinba selling for $5,160,000, 29% above reserve.
Later, the Bunnings at Plainland in Queensland sold for 11% above reserve on the strongest Bunnings yield ever for a traditional land and buildings investment, changing hands for $22.2 million on a yield of 4.21%.
13 investors made bids on the Bunnings, all were first-time Bunnings investors, including 8 from Melbourne who all bid sight unseen.
The Bunnings buyer and underbidder were both Melbourne based private families who weren’t able to inspect the property before the auction because of the interstate Covid border closures.
The only Bunnings result ever to beat this outcome was a one-off, 21-year ground lease sold in Glenorchy, Tasmania by Burgess Rawson in December 2018, which sold for $14.06 million on a yield 3.13%.
All six childcare assets sold at the Melbourne auction for a sub 5% yield, with a G8 childcare centre in Ocean Grove achieving the sharpest yield for a regional Victorian property, selling for $3,300,000 on a yield of 4.39%.
The in-person auctions all took place according to strict Covid-19 guidelines, with masks and social distancing.