Auctions lead to lift in prices
Covid-busting businesses including small retail sites, childcare centres, medical facilities and service stations have powered almost $190M in auction sales across Australia’s three largest cities.
Burgess Rawson partner Billy Holderhead said the firm’s auction, held over three days last week, performed “well beyond our wildest expectations” as investors sought security in pandemic-proof businesses.
The auction included Burgess Rawson’s first standalone campaign in Brisbane, where buyers pounced on 17 of 18 listed properties for a total of $51.4M – 13% over reserve.
Across the three days, 546 registered bidders vied for 54 properties around Australia. Of those, 49 sold – a 90.7% clearance rate with a blended yield of 4.7% and undeployed capital of just over $1.5B.
Properties that sold included 10 childcare centres, eight automotive service centres, six medical or veterinary facilities and a host of retail outlets including bank branches and fast food outlets.
Mr Holderhead said the portfolio lacked some “hero” properties housing marquee retailers, but buyers saw the potential for excellent returns. “Most of those businesses have traded strongly through Covid,” he said.
“This portfolio was a really even list. It didn’t have those standout properties like a Bunnings that everybody watches, but we had a response that was as big as those.”
In the Melbourne auction on September 28, Kingston Funerals’ Cheltenham premises attracted 69 bids from 14 bidders, selling to a Melbourne-based Chinese investor for $3.83M with a 3.78% yield.
A local buyer snapped up a Coates Hire site in Adelaide’s Albert Park for $16.1M, 18% above reserve and with a yield of 3.59% in a hotly contested sale.
Seventy-five bids drove the price of a Ford dealership in Melbourne’s Sunbury to $9.61M with a 5.2% yield. The winning bidder, based in Sydney, has spent about $15M through Burgess Rawson this year without inspecting any properties.
In the Brisbane auction the following day, a Melbourne investor beat 24 bidders to secure a Mitchelton Jax Tyres outlet for $4.52M, 29% above reserve, with a 3.1% yield. A KFC and Pizza Hut in Urraween, Queensland, sold after 84 bids for $7.96M – 35% above reserve, with a 3.98% yield.
Two Greenacres Vets properties in Toowoomba sold separately to a Sydney and a Melbourne investor for a combined $3.365M, with yields of 4.49% and 5.14%, respectively.
At the Sydney auction on September 30, 22 bidders pushed the Umina Beach Affinity Childcare sale price to $2.05M, with a record-breaking yield of 2.99%, while Turramurra Handprints sold for $8M – $1.85M or 30% over reserve, with 16 bidders in the hunt.
The pandemic has spurred interest in Covid-resilient businesses. “Victorian and NSW buyers in lockdown haven’t had normal distractions. They have time on their hands. They are digging into property and the fact they can’t inspect it has not been an issue,” Mr Holderhead said.
Burgess Rawson’s next commercial auction will be held in Sydney, Brisbane and Melbourne from November 9 to 11. It will include more than 50 properties across five states with tenants including KFC, Coles, Woolworths, Dan Murphy’s, four ALH hotels, Ikea, Centrelink, Kmart, Domino’s and childcare centres.