The Melbourne shopping village that is hotter than Lygon Street
Two neighbouring shops in Melbourne’s inner north, held by the same family for more than 50 years, have been sold to two separate offshore investors on sub-3.5 per cent yields.
The shops, at 382 and 384 Rathdowne Street, Carlton North, were sold in consecutive auctions by CBRE’s Melbourne Strip Retail Investments team, for $1.56 million and $1,665,000 respectively.
Listing agent Rorey James said both results were in excess of the reserve price, but more impressive were the yields.
At 2.8 per cent and 3.2 per cent (382 and 384 respectively), they bettered the yields for the previous four recorded shop sales along nearby Lygon Street – the iconic Italian restaurant strip in nearby Carlton.
In comparison with Lygon Street – which is one of Melbourne’s most prominent tourist streets – Rathdowne Village is a relatively quiet pocket, with business primarily repeat customers who live in the area.
But Mr James said that offshore investors were now looking beyond Melbourne’s CBD.
“The results are very positive for owners in the Carlton and inner-city area, with the yields representing a premium when compared to the past four transactions that have occurred along the more highly regarded Lygon Street.
”Owners should also have a great deal of confidence in both properties selling to offshore buyers, a sign that this buyer-market is very confident to buy properties outside of the traditional Melbourne CBD.”
Carlton North may have a long association with Melbourne’s Italian community, but it was China-based buyers driving the greatest deal of interest in Thursday’s sales, with 10 bidders active on the day.
Mr James confirmed that both buyers were China-based, but the deals were independent of one another, “a positive indication of the depth of buyers in the market for commercial properties”.
“There was very strong local and offshore interest in both properties throughout the five-week campaign, with over 200 different inquiries being received from a wide range of buyer types,” he said.
One of the shops, 382 Rathdowne Street, is currently leased as a fish and chip shop on a four-year lease, with annual income of approximately $49,596.
While 384 Rathdowne Street is leased to a grocer on a five-year lease, with an annual income of $56,280.
Both stores have traditionally operated as grocery and fruit businesses. The properties were sold on behalf of four beneficiaries of a deceased estate.