“Purchasers are out to buy, and vendors are meeting the market. The level of active bidding was the highest we’ve seen this year, particularly for fast-food investments.”
An extremely high clearance rate was the key statistic to emerge from Burgess Rawson’s 156th instalment in the National Portfolio series, with 91% of the 32 properties presented finding new owners, either under the hammer or prior to auction. Supported by an average yield of 5.61%, essential services powered another successful campaign.
“This week we’ve seen consistent and competitive bidding in every capital city, with higher registrations, clearance rates and bidding numbers demonstrating the underlying strength of the investor market,” stated Burgess Rawson’s Chief Executive, Ingrid Filmer.
Clearance numbers were best bolstered by the sales achieved last Tuesday in Sydney, where the Sydney Opera House played host to 100% clearance rate, where $17.445 million in commercial property was exchanged. Some of the more notable transactions included the $11.015 million sale of an industrial asset in the ACT’s suburb of Hume (covered in today’s Deals of the Week article), and the divestment of a freehold medical investment from Coffs Harbour, which sold for $2.05 million to generate a 5.37% yield.
Burgess Rawson Portfolio Auction 156 - Courtesy of Burgess Rawson
“Investors are looking for strong, passive investments which demonstrate secure long-term income streams, and medical investments are great examples of this,” explained Burgess Rawson’s Kieran Bourke, who spoke to the stability supplied by health tenants. “Providers [are] wedded to their location due to the long-term nature of their clients and the essential services they provide.”
The success persisted as the event shifted to Melbourne’s Crown Casino for the second day of auctions, as more than 150 registered bidders competed for 20 properties, delivering a 95% clearance rate with an average yield of 5.38%. According to Shaun Venables, yields softened marginally by 52 basis points when compared to the agency’s September auctions.
“The underlying strength of the commercial property market is continuing to make its presence felt,” stated Mr. Venables. “Purchasers are out to buy, and vendors are meeting the market. The level of active bidding was the highest we’ve seen this year, particularly for fast-food investments.”
Melbourne’s order of sale featured a wealth of variety, with assets from all range of sectors represented. Fast food was responsible for the highest value sale of the day, with a Carl’s Jr restaurant in Beaconsfield being acquired by a private investor for $5.454 million on a yield of 4.4%. A Taco Bell outlet, also located in Beaconsfield, was purchased for $3.82 million on a yield of 4.58%, further demonstrating the investor engagement in fast food.
“Fast food held firm due to both a lack of stock and investor appetite, leading to intense bidding,” Mr. Venables assessed.
Brisbane’s lineup was similarly multifaceted, with an industrial facility in the rural locality of Emerald selling for $2.1 million, a Liquorland in Burpengary East being purchased for $765,000, and an EG service station being divested for $1.421 million.
Burgess Rawson Portfolio Auction 156 - Courtesy of Burgess Rawson
The three-day bidding frenzy produced $84.6 million in commercial property sales, giving the rest of the market a great indicator of demand. Despite the inflated cash rate, investors continue to engage with high quality property.
“Since June this year, the average Burgess Rawson Portfolio Auction yield has compressed 102 basis points to 4.86%. In this same period, the reserve bank cash rate has risen 150 basis points,” stated Burgess Rawson’s Beau Coulter.
“We think this is amazing, and our hard-working agents deserve all the thanks for their trusted advice and dedication they put into marketing each one of these properties on behalf of our valued clients.”
The final Burgess Rawson Portfolio Auction of 2022 is set to take place between the 6th and 8th of December.
