More than $26 million of Queensland assets were sold under the hammer as investors become increasingly prepared to pay a premium for quality properties with long leases.
Seven Queensland properties were sold in last week’s Burgess Rawson auctions in Sydney and Melbourne, with southern investors making their presence felt in the Sunshine State.
Burgess Rawson’s Glenn Conridge said that despite yields tightening, NSW and Victorian investors could snare a property with returns to 200 basis points better in Queensland than their home state.
“There has always been better returns in Queensland, and there’s always strong competition for quality or new buildings, with a good covenant and long WALES (weighted average lease expiry),” he said.
The properties sold were:
C&K childcare centre, 136-140 Gympie Rd, Strathpine, $6 million (5.9 per cent yield)
7-Eleven, 328-330 James St, Harristown/Toowoomba, $4.164 million (9.95 per cent)
Little Scribblers childcare centre, 2-8 Nesbit St, Southport, $2.85 million (5.85 per cent)
Cash Converters, 2-4 Dickson St, Morayfield, $3.405m (6.95 per cent)
Goodstart Early Learning childcare centre, 47 Riversdale Rd, Oxenford, $3.551 million (7.24 per cent)
ARRB Group office, 21 McLachlan St, Fortitude Valley, $4.5 million (6.79 per cent)
GHD Engineering office, 70 Barolin St, Bundaberg South, $2.130 million (7.4 per cent)
Mr Conridge said strong lease terms were an investor’s greatest consideration when buying properties.
“The lease is paramount with any of these investments,” he said.
“A 10-year lease is an instant attraction, while a short lease is a harder sale.
“The Strathpine and Southport childcare centres have leases running up to 2032 plus options, while the Oxenford childcare centre lease went to 2024 with an option, and the Harristown 7-Eleven lease went to 2020.
“A strong long-term lease is three-quarters of the battle and the price-and-yield comparisons for these deals to a large extent reflect that,” Mr Conridge said.
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Written by Chris Herde, Brisbane Courier Mail