One third of commercial properties sell ahead of Burgess Rawson auction day

“It used to be that everyone was after assets that were recession-proof,” said Burgess Rawson director Darren Beehag after the company’s massive August online auction of 18 commercial properties from the Sydney Opera House on Tuesday – of which six were snapped up pre-auction. “But now it’s the properties that are COVID-proof.

“They’re all proving very, very popular,” he said. “We had so much demand from all over the country for these properties, and so much demand before to take them off the market too. These auctions are working so well online now. I think buyers are feeling very comfortable about them, even when they’re in lockdown.”

More than 100 potential buyers registered before the auction, either online or in person at Burgess Rawson offices across the nation, paying a deposit of $10,000 each in order to bid. There was then often fierce competition between up to 11 keen purchasers before the hammer came down on 16 of the 18 assets, a success rate of 89 per cent, for $42.2 million worth of property – $2.4 million above reserve.

“I think there’s a huge appetite for commercial real estate today,” said Burgess Rawson director Kieran Bourke. “The number we sold before the auction showed how scared people were that they might miss out, and how determined they were to buy.

“I think residential property prices are now so high, and often offer so little return, [so] more people than ever are looking at investing in commercial property as they can have something from $400,000 to $20 million. There’s something for everyone.”

Demand at the auction outstripped supply by the ratio of six to one, consistent with results throughout the year so far. Properties were snapped up from $400,000 to nearly $10 million.

The best seller was a Rise & Shine Childcare centre in Sylvania, in Sydney’s south, which sold for $9.4 million on a national record yield of 3.7 per cent. Another childcare centre, the G8 Education Childcare Centre in Dubbo, NSW, sold for $2.032 million on a 4.76 per cent yield, and a third, Wonderschool Early Learning in Phillip, ACT, sold for $9.895 million on a yield of 5.21 per cent.

“They’re a really popular asset class and a quality asset, with a lot of government support,” said Burgess Rawson director Rhys Parker. “We’ve had a lot of interest in them throughout the campaign.

“Medical centres were also in high demand. People like them because quite often they’re seen as having ‘sticky’ tenants who’ll be around for a long time because of their relationships with patients and the high cost of their fit-outs.”

Ones to sell at the auction included a medical investment in Wanniassa, ACT, which was bought for $1 million on a yield of 4.72 per cent, another in Campbelltown, Sydney, which went for $651,000 on a 4.83 per cent yield, and a third in Maryborough, Queensland, for $1.3 million on 7.72 per cent.

Fuel was considered another essential and, in Tamworth, NSW, the United Petroleum station was sold for $5.02 million on a 4.73 per cent yield. “That was a really strong result on a sub-5 per cent yield,” said Mr Beehag. “We’d been expecting $4 million to $4.5 million, but the result far exceeded that.

“Service stations are just really popular at the moment and this had a good, clean net lease where all the outgoings like insurance, rates, repairs and maintenance are paid by the tenant. We had 11 registered bidders for that one, and it reflects the appetite now for regional centres. They’ve always been strong but COVID has meant that there’s no resistance at all from buyers in Sydney, Melbourne or Brisbane.”