A trendy Sydney restaurant fetched the highest price at Burgess Rawson’s first auction of the year this week. And, agents say it continues a trend of interest in essential services for investors who are seeking the safety of real estate investments.
With uncertainty in other markets, Burgess Rawson’s Sydney and Melbourne portfolio auctions this week both hosted strong turnouts and fierce bidding, with investors keen on well-leased commercial properties.
Associate director Rhys Parker said the high level of interest at the Sydney Opera House auction on Tuesday mostly came down to the extremely low interest rates.
“There was fierce competitive bidding on most opportunities because interest rates are so low,” he said. “It demonstrates a return to normality but moreover a redoubling of public interest in real estate.”
One big ticket item was award-winning Sydney steak restaurant Bistecca, which is secured on a 10-year lease until 2028 and sold for $6.5 million. The trendy Bridge Street restaurant and cocktail bar opened in 2018.
Demonstrating the continued high interest in essential services, it was one of five properties that sold for a total of $19.22 million and a clearance rate of more than 70 per cent.
Another stand-out was the Eastwood dental clinic that sold for $3.115 million, continuing a trend of interest in medical and dental assets. It had attracted strong interest from both domestic and international buyers, with more than 150 inquiries about the property before the auction.
Mr Parker said the strong turnout followed good results in December’s auction which included the sale of a Dan Murphy’s for $10.8 million.
“There is an appetite for essential services,” he said. ”We would expect that fierce competition between investors to continue to mean really strong price outcomes for good commercial real estate investments.”
Burgess Rawson Melbourne director Raoul Holderhead saw similar trends at his Wednesday auction, as well as a huge turnout.
“It was incredible,” he said. A Viva Energy service station at Torquay, Victoria, sold for $8.355 million after taking 105 bids. Other sales included medical facilities, retail properties and food outlet sites.
“They’re drought-proof,” he said. “Everyone’s got to eat, drink, get fuel, and use medical services.”
Interest in childcare properties also remains high: six centres were for sale in Melbourne, and they all sold.
In Sydney, a high-occupancy centre in Harrington Park sold for $3.105 million.
“Childcare has government support, so I can’t see the focus on that changing in a while,” Mr Holderhead said.
Mr Parker said investors would continue bid on good-quality properties. “These are things that people will be proud to own,” he said. “People want to own these types of properties and we’d expect to see some strong results in the forthcoming auction because there’s always interest in good real estate.”
In a sign of the times, Mr Holderhead said all but one of the properties sold on Wednesday had bidders who hadn’t inspected the property in person, and 2691 people logged in to a livestream of the auction. “With covid, investors have changed their ways,” he said. “The days of buying stuff site unseen, that’s nearly every property now.”