Sydney, 10 August 2015 –The Culburra Beach Woolworths on the NSW South Coast has been sold for $9,400,000 in a deal which highlights the continued private investor appetite for secure, long leased retail investments.
The sale was negotiated on behalf of prominent retail developer Michael Lasky at a price which reflects a sharp yield of 4.97%.
Justin Dowers and Mark Wizel, of CBRE Retail Investments, negotiated the sale in conjunction with Gross Waddell.
Mr Dowers said it was the first time a regionally located, freestanding supermarket had sold on a yield under 5%. The property is situated in Culburra Beach, some 181km south of Sydney in the Shoalhaven local government area.
“This is a landmark sale for a freestanding supermarket. We had a great level of confidence that the property would sell, however to have achieved a yield of under 5% for this asset is a dream result for our client,” Mr Dowers said.
CBRE’s Mark Wizel added that significant yield compression had occurred right across the commercial property sector in the past two years, particularly in relation to long term leased properties with high quality covenants.
“Investors have made their acceptance of lower yields clear in what they have bought and the prices they have paid,” Mr Wizel said.
“Recent results in the supermarket sector, in particular, are without doubt being influenced by the strong performance of the tenants themselves, with Woolworths and Coles recording 3.4% growth and 2.8% sales growth respectively in the first half of 2015.”
Access to bank finance has been another market driver.
“We have seen enormous competition from the big four banks, all of whom are continually vying to fund assets such as Culburra Beach. The margins are the sharpest we have seen since 2006 and we expect continued decompression of margins to occur in the coming months,” Mr Dowers said.
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