Investors have defied the market jitters from the pandemic and snapped up close to $1 billion in a range of bottle shops, service stations, childcare centres, supermarkets and bank branches across the country.
Through a large-scale auction by Burgess Rawson on Tuesday close to $42 million of assets were sold on a solid yield of about 5.6 per cent, with the long-term leases to sectors that are widely seen as ”pandemic proof” the attraction for small to medium investors.
In a separate recent sale the Franciscan order of Friars Minor raised more than $17 million in the sale of a large-scale seniors living development site to Uniting Care.
The site allows for up to 500 dwellings and a further 200 aged care beds and forms part of the rezoned master plan for the Maryfields Estate. There is also further developable land for uses, including business precincts and residential subdivisions.
Matthew Meynell and Shalain Singh, of Colliers International, advised on the sale at 192 Narrellan Road, Campbelltown, on behalf of the order and worked closely with property advisory firm Innova Capital.
The $13.25 million sale of a Dan Murphy’s bottle shop in Mosman, Sydney, showed the demand for high-yielding bricks and mortar with long-term tenants. The property was sold at the Burgess Rawson portfolio auction last Tuesday.
In Nowra, on the NSW south coast a 13,130-square-metre industrial site leased by V&C Foods went for $9.25 million and in Kanwal, further north on the NSW Central Coast, a petrol station was sold for $6.3 million.
Burgess Rawson’s Darren Beehag said investment on the NSW South Coast has been unprecedented, with record levels of government infrastructure spending and significant private investment.
“One is the new Bunnings at South Nowra which will have an end value exceeding $50 million when completed in late 2020,” Mr Beehag said.
Reflecting the high demand for assets leased to essential services is the Burgess Rawson 2019-20 Investment Sales Report, where 300 total sales were recorded nationally, with a combined value of $939.7 million.
This was up $55.4 million from last year. Of the 300 national sales, 218 transactions were for essential services, with a combined value of $742.12 million.
Burgess Rawson Melbourne managing director Ingrid Filmer said commercial property was, “without a doubt”, the investment class of choice for a disruptive economic environment.
“It was a year of extraordinary generational events for our nation – bushfires, negative CPI, lowest interest rates and a global pandemic for good measure,” Ms Filmer said.
Burgess Rawson sales data shows that despite the challenges, heavy investor demand for properties that showed resilience and defensive qualities prevailed.
Ms Filmer said the various impacts to the economy and property sector has seen a new rule book introduced to investors, where the more defensive the asset class and tenant is to disruption, the more investors are prepared to pay.
“Recent sales of properties leased to tenants in essential service sectors demonstrates that there has been no COVID-19-related price deterioration,” she said.
Despite the pandemic impacting states in different ways, and triggering varying restrictions, data shows that investors were confident making cross-border transactions for quality properties, even without a physical inspection.