Higher rates fail to dampen demand for CRE investments

Investors splashed out $85 million at last week’s Burgess Rawson portfolio auctions along the eastern seaboard, with childcare, automotive, fast food and convenience retail assets highly sought after.

The auctions in Sydney, Melbourne and Brisbane saw a success rate of 97% and a blended yield of 5.41%.

“Rising interest rates and inflation, coupled with falls in retail spending have failed to dampen activity in the essential services sectors,” Burgess Rawson’s Adam Thomas said, adding that childcare, automotive, fast food and convenience retailing assets were particularly hotly contested.

The Brisbane event realised $19.42 million in transactions and a blended yield of 5.56%, with all eight properties offered selling under the hammer. The top sale was of the 100-place Imaginarium ELC in Burpengary, which sold for $6.055 million, on a yield of 5.28%. The 1,834 sqm site directly in front of prep to year 12 school St Eugene College has a brand-new 15-year lease plus options.

The Mexican-inspired Guzman y Gomez outlet in Richlands sold for $4.2 million, reflecting a yield of 4.2%.

The Melbourne event achieved $30.6 million in sales with a 92% clearance rate, on a blended yield of 5.49%. One investor paid $6.979 million for the Guardian Childcare centre at Seacombe Gardens in South Australia, showing a yield of 5.5%

Like Brisbane, Sydney’s event saw a 100% clearance rate. Top results included the $7.5 million sale of a 7-Eleven at Pacific Highway in Killara on a yield of 3.96%.