Went to a commercial auction last week in Franklin street in the Melbourne CBD, i was there out of interest more than anything, but i was informed that the property had sold the night before for around 840k, the agent was quoting 750k. I really cant understand why an investor ( as it wasn’t the owner of the restaurant that leases it) would purchase a somewhat risky investment with a return of less than 6%… you would make more money in the bank (well almost) … has anybody else noticed commercial returns are losing their better returns edge!?
Yields generally have returned to around their long term average ranges ie a better reflection of the risk however there have been some noteable sales which have been out of line – Victorian Bulky Goods/Homemakers centre sold by a LPT to a private buyer on >8% yield and at the other end a shop sold on 1.5% yield in the inner city (Melb). One possible explaination is that the site had a major reversionary rental or major upside on the rent with an impending fixed rent review or alternatively the site had major redevelopment potential.
Analysis is always the key to these deals.
Passive motel investment returns currently around 9%, tenants pay all outgoings on 25-30 yr leases.
Don't understand why anyone would buy commercial at anything less.
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
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