Written by Adrian Ballantyne, Real Commercial
Could you spend millions of dollars buying a property without ever having seen it, let alone set foot in it?
Commercial property buyers continue to clamour for assets at auctions across Australia, with many prepared to part with millions despite having only seen photos of the interstate asset they plan to purchase.
Property agent Burgess Rawson celebrated its 100th Portfolio Auctions in both Sydney and Melbourne this week and there was no sign of a let-up in investor enthusiasm.
In Melbourne on Wednesday, 12 bidders went head to head for a McDonalds fast food outlet in North Geelong, with the property selling for $3.05 million and driving the yield down to a tight 3.85%.
Childcare centres were also keenly sought after, with two centres in Hampton and Heatherton in Melbourne’s south selling for $3.95 million and $3.2 million, respectively, on yields of well under 6%.
A Hyundai dealership in Mornington was also picked off for $3.451 million, while a bakery and pharmacy in Wodonga, on the Victoria-New South Wales border, went for $1.325 million and $1.771 million each.
Burgess Rawson director Graeme Watson says buyers continue to surprise him with their preparedness to splash out on properties they may have had no interest in buying just moments earlier.
“Investors sometimes come to buy a property and miss out, and end up buying another one they hadn’t contemplated. In a way sometimes they feel like they’ve got to go home with something,” Watson says.
“We’ve sold many properties where people have never got around to seeing them.”
“For example, there was the Dan Murphy’s in Lismore and the Coles supermarket at Tom Price in the middle of Western Australia. The purchasers never went to see them.
“We once had an investor fly down from Darwin to buy the Woolworths supermarket in Geelong West and missed out, and without any preparation whatsoever bought the Bunnings store in Bendigo.”
In the 12 years since Burgess Rawson held its first portfolio auction it has sold more than 10,000 properties worth an estimated $25 billion.
Among them have been caravan parks, a cinema complex at the Victorian coastal town of Lorne and a large neon sign on the side of a prominent Melbourne building.
And Burgess Rawson isn’t expecting a slowdown anytime soon, Watson says.
“We book Crown Casino two years ahead, that’s how confident we are in this method of marketing,” Watson says.
“These auctions have become so popular that people come just for the entertainment and witness a broad market occurring in front of them.”