Chester Square Shopping Centre sparks bidding war

The shopping centre changed hands at a remarkably crisp yield of 3.78%, prompting claims it had broken a national record result for the sharpest for this kind of centre.

A series of developers chased the site for its mixed use potential, driving the price up, before a private local group won control of the site.

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The centre last changed hands in 2010 when the Smorgon family-linked company picked up the Chester Square from Mirvac Group for $29.5 million.

In the latest play, the sought-after neighbourhood shopping centre was sold by Colliers International and generated more than 200 inquiries from domestic and offshore investors, with six parties offering below a 4.25% return.

“The benchmark result, and extremely competitive nature of the Chester Square Shopping Centre campaign, highlights the market depth for prime freehold Sydney metropolitan retail opportunities,” Colliers International agent James Wilson says.

The result was 192 basis points sharper than the most recent Sydney metropolitan freehold neighbourhood shopping centre transaction, the Chipping Norton Market Plaza which sold for $30.5m in July.

The premium can be partly attributed to the underlying retail performance of the centre which sits on a large 1.7ha island site near Chester Hill railway station.

Colliers International national director of metro sales, investment services, Harry Bui, says bidders were drawn to capitalise on the income and cashflow generated from a mix of strong-performing national retailers and well-established local tenants.

“Once the centre’s mixed-use potential is unlocked, future residents will be afforded convenient access to employment hubs and will be serviced by the retail offering below,” Bui says.

This article originally appeared on www.theaustralian.com.au/property.