Pandemic-Proof Assets Sell on Sharp Yields

Buyers from Sydney and Melbourne dominated the Burgess Rawson commercial property auction in Brisbane yesterday, bidding hard and forcing yields down on some properties to about 3 per cent.

The competition was most intense for a JAX Tyres site at Mitchelton in Brisbane, which sold on a yield of 3.10 per cent to a Melbourne buyer who paid $4.52 million for the large corner property with a long lease and development upside.

‘‘We had in excess of 25 bidders for that property – it was the most highly sought after,’’ said Campbell Bowers, joint head of agency for Burgess Rawson in Queensland.

‘‘The reason for that was it was the perfect blend of security, with an essential services tenant, and a national brand holding a really good lease.

‘‘It also had really good long-term upside through potential development of the land.

‘‘The intrinsic building and land value were worth quite a large percentage of the purchase price.’’

There were 53 bids before the 1,915sqm site seven kilometres from the CBD sold for 29 per cent above reserve.

Mr Bowers estimates that at least 70 per cent of the buyers at the auction were based in either Sydney or Melbourne and unable to inspect the properties they bought because of Queensland’s border closures.

Overall, 17 of the 18 properties which went to auction sold on a blended yield of 4.99 per cent.

There was an average of 13 bidders for each property, many of which fetched prices well over reserve.

Competition was also hot for a Bribie Island fish shop at Bongaree, which sold for $1.99 million on a yield of 3.12 per cent.

‘‘That one did go sharp because of the development potential – you can go up to four storeys on that site,’’ Mr Bowers said.

‘‘There’s a big flight to quality at the minute. Values have been readjusted in the post-COVID environment in that people are wanting to own things that are pandemic-proof over anything.

‘‘Things like fast food, fuel, liquor, tyre and auto. So something that is going to remain open through any lockdown where the tenant’s turnover goes up rather than down – people are running really hard at them.’’

Continuing the food theme, a big site housing a KFC and a Pizza Hut at Urraween in Hervey Bay was the biggest sale of the day at $7.96 million on a yield of 3.98 per cent.