Rain, hail or shine, investors bidding hard for commercial property
A childcare centre attracted the most bids and sold for the lowest yield, but it was a mystery bidder who stole the show at a commercial property auction in Sydney on Tuesday, picking up two properties for more than $15 million.
On a wet day with the looming threat of a train strike, many buyers stayed at home and bid either over the phone or online with eight properties selling for $39.6 million on a blended yield 5.63 per cent at the first Burgess Rawson auction of the year.
Burgess Rawson partner Kieran Burke said the number of properties auctioned was down on volumes achieved late last year but said vendors in particular are still switching into business mode and that the pipeline is looking strong over the next few weeks.
“It’s always a little bit tough at the start of the year trying to get people out of holiday mode to sign agency agreement, pay marketing, and get photos taken – it’s purely just a timing thing,” he said.
Mr Bourke said around 70 per cent of bidders did so remotely, including a first-time, last-minute buyer who impetuously bought a car yard at Coffs Harbour for $6.96 million sight unseen a few minutes after paying $8.3 million for The Alby Pub in Canberra.
“It happens all the time,” said Mr Bourke.
The buyer had, however, inspected The Alby Pub, which has an annual rent of $440,000 and was bought on a yield of 5.3 per cent with a 10-year lease to National Group featuring annual increases of 3 per cent.
He paid a tighter yield of 5.17 per cent for the Bellbowrie European Motors site at Coffs Harbour, which came with a 10-year lease and 10-year option to the Tony White Group and starting income of $360,000.
Mr Bourke said the Busy Bees childcare centre in the south-west Sydney suburb of Picton was in high demand, eventually selling for around $300,000 above reserve at $3.29 million on a yield of 4.38 per cent.
“Child care just keeps on keeping on,” Mr Bourke said.
“It was a Sydney-fringe child care operation, a government funded asset class. In that price bracket, around $3 million, we were always going to have plenty of bidders.
“A lot of mum and dad investors have that kind of capital.”
Other sales included a United Petroleum leased service station at Tweed Heads, which went for $3.9 million (5.38 per cent return), while the lowest price paid was for an office and apartment in Narrabri that sold for $1.22 million on a yield of 8.68 per cent.
