Property investment firm RG Property has listed its Woolworths anchored neighbourhood shopping centre, The Village Dandenong, for sale via an International Expressions of Interest.
CBRE Victorian Retail Investment Directors, Justin Dowers and Mark Wizel, in conjunction with JLL Retail Investments Directors, Stuart Taylor, Jacob Swan and Stephen Bolton, have been appointed to market the 77/125 Princes Highway, Dandenong property.
The two-year-old convenience based centre is situated on a 18,790sqm site, comprises a 3,800sqm Woolworths Supermarket and BWS and is supported by 15 specialty retail tenancies.
RG Property CEO Rhett Williams said; “RG Property has seen growth in the asset since 2015 and expect the purchaser will continue to enjoy growth with the entrance of Bunnings into the precinct.”
Prospective purchasers are offered a net operating income of $1,796,674 per annum and long term income security and tenure from the strong lease covenant to Woolworths, comprising a 15-year initial lease with fixed 5% annual increase every 5 years.
Located approximately 35km south east of Melbourne CBD, Dandenong is one of Victoria’s largest economic hubs and forms part of Melbourne's thriving south eastern growth corridor.
The centre benefits from its access and exposure to the Princes Highway and its adjacent position to the new 'Series 7' Bunnings Warehouse store opening July 31, 2017.
CBRE Victorian Retail Investment Director Justin Dowers said the asset should appeal to a broad range of private, national and off-shore investors.
“Victoria recorded a quarter of all retail property transactions across Australia in 2016 with neighbourhood centres being the most commonly traded asset class by number of transactions, a trend witnessed nationally as investors try to gain positioning in a tightly held market,” said Mr Dowers.
“Yield compression has also been supported by the strength of the retail investment landscape in Victoria over the last 12 months. Neighbourhood centres are regularly transacting at low 5% yields.”
Mr Taylor said "retail assets with strong lease covenants such as Woolworths continue to be hotly contested. With high liquidity levels in the market, these assets attract investors as they are considered to be low risk, defensive assets, offering strong security of income."
Mr. Taylor added; “Australian retail yields are notably higher than the average recorded on the global stage. Therefore, allowing a larger return on investment on Australian retail assets relative to other established markets including London, Paris and Singapore. The yield compression in Australia has lagged that of other major markets which has resulted in a wave of offshore capital being directed into the market for the comparative higher retail yield. Global investors continue to be active in the Victorian market, attracted by the diverse economic platform which creates a level of economic stability, the high population and tourism numbers and the depreciation of the AUD since 2013.”
The yield spread to alternative investment opportunities has also seen many investors have a global re-allocation to direct real estate. The volatility in the stock market and low bond yields has fuelled an elevated level of capital to all property markets.
“Favourable debt funding options have also supported strong investor demand as the pool of potential buyers increases with a greater accessibility to capital. This is particularly relevant for this end of the market where private or small syndicates are the most common buyer profile, given the more affordable price point,” Mr. Taylor concluded.
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