“Higher registrations, yields and capital flow demonstrate just how strong demand is for high-performing essential service assets."
Burgess Rawson’s 155th instalment in their series of portfolio auctions wrapped up last Thursday in Brisbane, and thanks to a fiery Melbourne leg which drew more investors than usual, it was a raging success. Essential services remained an investor favourite, as the final sales figure tipped $111 million.
Over the three days of the event, 30 properties were sold for a clearance rate of 77% and an average yield of 5.05%. Given the cash rate has continued to balloon over the past few months, Burgess Rawson’s results are proving tremendously favourable.
“The average yield at Burgess Rawson’s portfolio auctions has compressed 102 basis points since June portfolio auction to 4.86%,” explained Beau Coulter, Partner at Burgess Rawson in Melbourne. “In the same period, the reserve cash rate has gone up 150 basis points.”
The statistics were bolstered by tremendous sales in the medical centre, service station, ELC, fast food and retail sectors. Most notably, the sale of a United Petroleum outlet in Victoria’s Sunshine North prompted a $3.15 million sale, rendering a strikingly low yield of 2.97%. After a starting bid of $1.8 million, a competitive auction room drove the price up until the hammer fell at sub-3% yield.
45 McIntyre Road, Sunshine North VIC 3020 - Sold for $3.15 million on day 2
According to Burgess Rawson’s Eastern Seaboard CEO, Ingrid Filmer, the River Room at Crown was “the most active auction room we’ve seen this year.”
“Higher registrations, yields and capital flow demonstrate just how strong demand is for high-performing essential service assets,” stated Ms. Filmer.
Medical centres inspired a number of the biggest sales across the three days, including a Nest Family Medical Clinic on Kooyong Road in Elsternwick, and an AllCare Medical outlet in New South Wales’ Carnes Hill. The former sold for $9.85 million on a 4.82% yield; the latter secured $10 million for its vendor for 4.79% in yield.
Burgess Rawson's 155th Portfolio Auction - The auctioneer, David Scholes, conducting affairs on day 1
Geoff Sinclair, Director at Burgess Rawson in Sydney, said medical centres demanded the strongest investor attention in New South Wales.
“Medical centres and other essential service assets with established, long-term tenants are performing exceptionally, and we see no signs of this slowing,” Mr. Sinclair explained.
In Queensland, it was early learning centres that inspired investor interest most, with a brand-new childcare centre in Bardon selling to a private investor for $4,970,000 and a Genius Childcare facility in Nerang selling for $4,525,000.
Burgess Rawson's 155th Portfolio Auction - (Left-to-right) Sam Mecuri, Adam Thomas, Natalie Couper
For Queensland’s Managing Director, Adam Thomas, quality and certainty are the driving forces behind why childcare centres are attracting the interest of high-net-worth individuals and private family trusts.
“Investors are placing a high value on long-term leases to brand name national tenants and the childcare sector ticks all those boxes, with the added certainty that comes with strong government support and a growing population,” Mr Thomas said.
In uncertain times, investors across the country are opting for assured assets that give owners secure holding income over a protracted period. Burgess Rawson’s portfolio auction was a perfect demonstration of this principle.
“Sophisticated property investors look to stabilise with established investments and underpinned land value in volatile markets,” stated Mr. Coulter.
To keep up-to-date with all of the portfolio opportunities across Australia, check out our Commercial Investment Portfolios page on Commercial Ready, and our Development Site Portfolios page on Development Ready.
