Millions slashed from Circular Quay retail property values
Strata retail values in Circular Quay – the most expensive shopping and dining location in Australia – have taken a more than 10 per cent hit from the surge in interest rates after a restaurant below the Quay Grand building sold for $2.5 million less than its asking price.
Prominent investor and developer Karl Kazal put Eastbank, a 151 sq m pizzeria, bar and cafe at 61-69 Macquarie Street for sale in October last year with price expectations “over $23 million” – or $152,000 per sq m.
This was just below the record $153,358 per sq m he achieved in April last year when he sold the 75 sq m Guylian Belgian Chocolate Cafe beneath the Bennelong building at 1A Macquarie Street to a local private investor.
However, despite receiving offers from three Asian-based buyers, the restaurant, which was offered with a long lease, sold for $20.5 million, 10.8 per cent lower than the asking price.
The successful buyer was an “experienced investor from Hong Kong” who acquired the restaurant premises on a yield of 4.15 per cent.
The restaurant sits below some of the most expensive apartments in Australia and is part of a line-up of shops, eateries, cafes and bars that run from Circular Quay Wharf to the Sydney Opera House, all offering panoramic views of Sydney Harbour and the Sydney Harbour Bridge.
Colliers agent Joseph Lin, who negotiated the sale with colleagues Steam Leung and Callum Cooke, in conjunction with Fiona Yang from Plus Agency, said the lower price achieved was “all to do with the cost of capital”.
“Interest rates have gone up, but premium location have held their values quite well,” he told The Australian Financial Review.
Based on how steeply interest rates have increased, the property might have only sold for $13 million, Mr Lin said, “so $20.5 million is a very pleasing result”.
“Regardless of recent rate rises and perceived worsening purchaser sentiment within the market, trophy assets such as Eastbank have proven to be resilient and are still achieving premium results,” he added.
The Eastbank Restaurant premises was the third strata retail property to be offloaded by Mr Kazal in less than a year, after he sold the Belgian chocolate Cafe in April for $11.5 million and the neighbouring 43 sq m bubble tea and juice shop for $5.7 million in February at a then record $132,000 per sq m.
In 2017, the Kazal family – Karl Kazal is one of eight brothers -sold Buckley’s Craft Beer Bar, a 408 sq m two-level strata property at Opera Quays (7 Macquarie Street) for $21.5 million to a local investor on a yield of 4 per cent.
The family own other harbourside hospitality assets, including multi-level Bar Mille at 100 George Street in The Rocks.
