Chinese investors snap up Sunbury retail centre for $15m

19 Jan 04:32 PM
Larry Schlesinger - Financial Review
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Situated 40 kilometres north-west of the Melbourne CBD, Sunbury Showrooms has a total lettable area of 5554 square metres and incorporates six home-maker tenants including The Good Guys, Godfreys, Petstock and Repco.

"The result we have achieved for Sunbury Showrooms has set a new benchmark yield for large format centres in both Victoria and Australia, with yields previously sitting above 7 per cent," said selling agent Justin Dowers who marketed the centre  with CBRE colleagues Chris Parry and Kevin Tong.

"With the current environment characterised by a lack of premium retail investment offerings, we are also seeing an increase in demand for assets located in outer metropolitan areas such as Sunbury, which are experiencing population growth and benefiting from government investment." 

Resurgence in Chinese capital

The deal is also indicative of the demand from Chinese groups for income-earning retail property investments amid a general resurgence in Chinese capital available for investment in the property sector.

Mainland Chinese investors accounted for more than half of the commercial real estate sold in Victoria by CBRE in the second half of last year.

Victorian retail investments snapped up by Chinese investors last year included Springhill Shopping Centre for $43 million on a 5.50 per cent yield, the Pakington Strand Shopping Centre for $31.8 million on a 4.9 per cent yield and the Bunnings Warehouse Yarrawonga, which sold for $11.6 million on a 5 per cent yield. 

In Victoria, large format retail centres are particularly appealing because of more liberal state zoning rules which allow a diversity of retailers to trade from them outside of the traditional "bulky goods' retailers.

​Mr Dowers said there was heightened confidence in the large format retail market and the associated lease covenants was helping to drive significant yield compression in this market segment.

"The sector is typified by long initial lease terms and fixed annual increases, which are very attractive to investors at the moment," he said.

An offshore Chinese investor group has set a new yield benchmark for Victorian large format retail centres after paying $14.88 million for the Sunbury Showrooms on the outskirts of Melbourne.

The showrooms, which were offloaded by private developer and builder H. Troon, sold on a yield of 6.5 per cent, which selling agents CBRE said was a record for the sector. It surpassed the $35 million sale last year of ASX-listed Phileo's Rocklea Homemaker centre in Bendigo on a yield of 7.7 per cent to Harvey Norman.

Situated 40 kilometres north-west of the Melbourne CBD, Sunbury Showrooms has a total lettable area of 5554 square metres and incorporates six home-maker tenants including The Good Guys, Godfreys, Petstock and Repco.

"The result we have achieved for Sunbury Showrooms has set a new benchmark yield for large format centres in both Victoria and Australia, with yields previously sitting above 7 per cent," said selling agent Justin Dowers who marketed the centre  with CBRE colleagues Chris Parry and Kevin Tong.

"With the current environment characterised by a lack of premium retail investment offerings, we are also seeing an increase in demand for assets located in outer metropolitan areas such as Sunbury, which are experiencing population growth and benefiting from government investment." 

Resurgence in Chinese capital

The deal is also indicative of the demand from Chinese groups for income-earning retail property investments amid a general resurgence in Chinese capital available for investment in the property sector.

Mainland Chinese investors accounted for more than half of the commercial real estate sold in Victoria by CBRE in the second half of last year.

Victorian retail investments snapped up by Chinese investors last year included Springhill Shopping Centre for $43 million on a 5.50 per cent yield, the Pakington Strand Shopping Centre for $31.8 million on a 4.9 per cent yield and the Bunnings Warehouse Yarrawonga, which sold for $11.6 million on a 5 per cent yield. 

In Victoria, large format retail centres are particularly appealing because of more liberal state zoning rules which allow a diversity of retailers to trade from them outside of the traditional "bulky goods' retailers.

​Mr Dowers said there was heightened confidence in the large format retail market and the associated lease covenants was helping to drive significant yield compression in this market segment.

"The sector is typified by long initial lease terms and fixed annual increases, which are very attractive to investors at the moment," he said.


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http://www.afr.com/real-estate/commercial/investment/chinese-investors-snap-up-sunbury-retail-centre-for-15m-20170119-gtukgn#ixzz4WHVBvrG5