Chinese buyers still in play as Richmond shop strikes gold
A Melbourne shop has sold for nearly $15 million on an eye-wateringly low yield at auction to a Chinese bidder, in a sign that offshore capital is still looking for a home in Australia.
The property at 487-495 Bridge Rd, Richmond, has a long-term lease to bedding retailer Adairs until 2027 but could have development potential in future, making it a decade-long land banking play.
Some 11 bidders competed at auction, but the winner was a Chinese party who paid $14.81 million for the block. The vendors were barrister Tony Kiel with sister Sandra Rush.
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With a passing rent of $423,000, the yield on the single-level asset is a razor-sharp 2.9%.
With 50 metres of street frontage, the 1650sqm landholding is on the Bridge Rd retail strip and near the Richmond Plaza Shopping Centre.
Agents on the deal were CBRE’s Mark Wizel, Rorey James, Julian White and Chao Zhang.
White says the deal shows the depth of demand for quality real estate.
“It really shows the trend at the moment for these land-rich style investment properties,” White says.
“While they will trade on a really low yield, people are happy to stomach that just because it will have quite a large land area, and they’re willing to be very patient with those assets.”
Wizel says Chinese buyers are an important part of the fabric of the domestic market.
“What we’re seeing is a reasonably healthy level of underlying confidence from investors, land bankers and developers of all descent, whether it’s of western descent or Asian descent,” Wizel says.
“There’s little doubt that the demand from mainland Chinese buyers has dropped dramatically over the past 12 to 24 months, but what we’ve seen so far in 2018 is the strength of the local Chinese market.”
The sale comes as separate figures showed Chinese investment into Australian commercial real estate totalled $4.5 billion, according to listings platform Juwai.com.
This article originally appeared on www.theaustralian.com.au/property.