The pull of Parramatta: investors get serious in battle for Clyde retail building
An automotive supply store in the Sydney suburb of Clyde has sold on an ultra-low yield of 2.91 per cent at the final Burgess Rawson Sydney auction of 2020.
A Sydney-based investor who had bought two other properties at Burgess Rawson auctions in the past 12 months paid $6,675,000 for the property, battling off four other bidders in an auction that went for more than 30 minutes.
The property, at 1 Parramatta Road, is leased to GPC Asia Pacific Pty Ltd – the largest automotive parts supplier in the country.
Burgess Rawson director Darren Beehag said that the result was “substantially above reserve”, pointing to the site’s proximity to Parramatta as a reason for the competitive bidding.
“It’s only a few kilometres from Parramatta CBD and I think the market is recognising that Parramatta is a serious investment location,” he said.
“It’s also a good Sydney metro investment, which are hard to come by. It ticked a lot of boxes,” he said.
Some 15 of the 18 properties sold – an 85 per cent clearance rate – for a total of $54,752,000.
Two properties – one in Queanbeyan, the other in Buderim, in Queensland – passed in, while another, in Kingscliff, was under negotiation at the time of publishing.
A Dan Murphy’s building in the Sydney suburb of Gladesville fetched the highest result of the day, selling for $10.8 million under the hammer.
The property was on a 15-year lease to 2030, with options to 2070 and returning an estimated net income of $410,184 a year, plus GST.
Burgess Rawson director and selling agent Simon Staddon said that the asset’s “essential service” status had contributed to the result.
“As Australia’s most well-known liquor retailer, this ‘set-and-forget’ investment is considered an essential service asset class and has performed exceptionally well during 2020,” Mr Staddon said.
Another essential service asset to sell under the hammer was a medical centre in Wyoming, on the NSW Central Coast, which fetched $1.89 million on a yield of 4.98 per cent.
“The market is craving for that sort of anchored investment,” Mr Beehag said.
Five shops that form part of a mixed-use development at 77-105 Victoria Road, Drummoyne, in Sydney, each sold – the highest result going to shop four, currently leased to restaurant chain Ribs & Burgers. It sold for $3,055,000 on a yield of 5.13 per cent.
Mr Beehag said that the results bode well for next year’s auctions, which will start in February.
“The year has finished on a really high note. What was evident today was that there’s a lot of cash in term deposits and those rates have come down yet again in the last number of weeks and [now] it’s investors trying to find a home for their money that’s going to result in a return better than exisiting cash rates. That’s the real driver and that was the recurring theme today and that’s going to drive equities and real estate [into the new year],” he said.
