A two-storey asset on Swanston Street in Melbourne’s CBD has set a new record building rate for a commercial property in Victoria, after selling for $9.2 million at auction.
The first building to come onto the market in the tightly-held retail strip in five years, 273 Swanston Street sold on a yield of 2.13%, with more than 200 attendees attending the auction amid global uncertainty.
The sale of the 130sqm building, leased to dumpling bar New Taipei, represented a new record rate of $70,769/sqm for the Melbourne CBD.
CBRE’s Melbourne City Sales team of Alex Brierley, Julian White, Nathan Mufale and Chao Zhang managed the sale on behalf of the private family who owned the building for the past 70 years.
Eight local and international bidders fought to secure the asset, with a Malaysian investor outbidding several Melbourne families and rival parties from Hong Kong and Malaysia.
“The record-breaking result is a clear indication from the market of the confidence buyers have for well-located, income-producing commercial assets,” Mr Brierley said.
“This is a continuation of the flight to quality we have seen as investors fiercely compete, amid a major supply-demand imbalance and despite global uncertainty.”
The building is next door to a prominent McDonald’s on the corner of Lonsdale Street and Swanston Street, in the Melbourne CBD’s booming northern precinct.
“As the first Melbourne CBD freehold auction in 2020, this was the first real test of the market and what we have witnessed is a continuation of the confidence buyers demonstrated in late-2019,” Mr White said.
“Coupled with other recent Melbourne CBD sales, it also demonstrates the significant power of the auction as a method of sale for properties that are suited to public competition.”
The result follows the sales of the Tsindos Greek Restaurant at 197 Lonsdale Street to a Taiwanese investor for $8.1m on a similarly tight yield of 1.29%, and the OPSM building at 384 Bourke Street for $22.5m on a 2.60% yield in December 2019.
“We are noticing many Asian buyers are recognising the rarity of these freehold assets within the CBD grid,” Mr Zhang added.
“They are looking for security and peace of mind in central locations and are banking on the growth forecasts for Melbourne compared to other cities.”
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
