Melbourne, 25 September 2015 – Unabated demand for quality assets in Melbourne’s CBD has triggered the sale of one of the city’s premium commercial hubs and popular food destinations, 206 Bourke Street.
Singaporean real estate group Hiap Hoe has appointed CBRE’s Mark Wizel, Josh Rutman, Kiran Pilai and Justin Dowers to steer the sale of the mixed use retail and office asset via an International Public Expressions of Interest campaign.
The property, which is set to become home to world famous dumpling restaurant Tim Ho Wan in November, generates a net income in excess of $7.5 million per annum.
Located on the edge of Bourke Street Mall - Melbourne’s fashion, dining, entertainment and lifestyle destination – the property is expected to achieve a yield of less than 6.5%.
Mr Wizel said the premium offering represented an outstanding investment opportunity.
“206 Bourke Street has quickly established itself as an iconic part of the CBD, and in particular, Melbourne’s Chinatown precinct,” Mr Wizel said.
“It is becoming a desirable destination, popular for its close proximity to great restaurants and entertainment options, which will no doubt attract significant buyer interest.”
Hiap Hoe has added significant value to the asset through the implementation and management of a strategic leasing campaign, that resulted in several new tenants, including the Dragon Boat and Shanghai Dynasty restaurants, Telstra and what has become JB Hi Fi’s strongest trading Victorian store.
In November, the world’s cheapest Michelin-starred restaurant Tim Ho Wan will ink a deal on a major part of the property’s Bourke Street frontage.
Mr Rutman said the property was expected to spark strong interest from both local and overseas investors, with value add players from Asia tipped to be strong suitors.
"The property is being sold with approved permits to develop a 140 plus room hotel, which is expected to attract strong interest from hotel operators and patrons alike,” Mr Rutman said.
“The property has and will always be underwritten by its significant land value, spanning over 3,000sqm of CBD land.
Mr Wizel added: “206 Bourke Street represents a terrific core opportunity for an experienced asset manager to fully exhaust the very low passing rents on specialty tenants, which is 41% lower then what is being achieved in and around Bourke Street for comparable space.”
“Prime yields for retail city centre assets have continued to compress over the past 36 months. In Melbourne, this has been driven by rental growth in the retail sector, continued strong trading for food and beverage tenants and an increased population due to the swell of apartment development in the CBD.”
He added: “There has been major appetite from a range of domestic institutions, private investors and off shore groups wanting to secure city centre retail assets and this has been evident in the most recent sale of the Myer Centre in Adelaide to listed Singaporean REIT Starhill for $288m in April 2015.”
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