Bunnings Sale Example of Strong Regional Investments

More than $130m worth of commercial properties sold under the hammer over three days at Burgess Rawson’s portfolio auction event, achieving a blended yield of 5.17 per cent from 35 sales.

A regional Bunnings store, a suburban Melbourne gym and a Victorian petrol station were among the standout performers, with just eight of 43 properties failing to achieve a successful bid at the third portfolio auction of the year, which were held in Brisbane, Sydney and Melbourne.

The highest price achieved at the auction was $16,202,000 for a new Bunnings store in Mt Isa, Queensland, on a yield of 4.29 per cent.

Set on a 15,430 sqm landholding, with a net income of $695,000 per annum and a brand new 10 year lease, the Bunnings store opened in February and was five times the size of the town’s previous Bunnings warehouse.

Campbell Bowers, Burgess Rawson Queensland partner and joint head of agency, said a couple of the handful of bidders – who were mostly high net-worth private domestic capital investors – had other Bunnings investments and were well-known investors in the sector.

“It was a new one – (a) sale and leaseback from Bunnings, they built it themselves to their very high standard, and put the lease in place and the selling of the property, which is something they do pretty regularly. It was a brand new building,” he said.

Mr Bowers said a large amount of capital had been coming from Sydney and Melbourne into Queensland since the pandemic, and the Bunnings Mt Isa sale was another example of the trend of regional Queensland investments performing strongly. “I think it’s an extremely positive outlook for Queensland. We are having a lot of investors, who have large landholdings in both Sydney and Melbourne, starting to look more and more up here.”

PropTrack economist Anne Flaherty said assets like Bunnings had consistently performed extremely well but since the onset of the pandemic there had been a growing interest in the assets, which were viewed as a cultural icon. “It is seen as a safe, reliable tenant, they are very popular with consumers, and they have a good growth outlook,” she said.

“So, from an investor perspective, getting an asset with a Bunnings in it, it’s not just appealing from the sense of having a high quality tenant, but it’s also appealing from the sense of owning an asset that’s housing one of Australia’s iconic brands.” Ms Flaherty added that investing in commercial property could offer a relatively good hedge against inflation.