Woolworths Doncaster East supermarket sells for $16.35m
Cashed-up investors are piling into Melbourne supermarkets as demand for defensive assets intensifies. Picture: Glenn Campbell
Investors scrambling for safety are piling into Melbourne supermarkets, with a Woolworths in the city’s east attracting 22 offers and leaving $260m in sidelined capital.
The freestanding Woolworths supermarket at Doncaster East has sold for $16.35m on a sharp 3.65 per cent yield, the tightest recorded for a full-line supermarket since 2022.
Colliers National director of retail middle markets Tim McIntosh said supermarkets were increasingly being prioritised for their income security and capital preservation appeal.
“Investors who are attracted to supermarkets really understand the defensive nature of the asset class,” Mr McIntosh said.
“There’s a strong capital preservation story, combined with very high conviction around the rental income, both its certainty and its potential for growth.”
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Located about 18km from the CBD, the Doncaster East Woolworths sits on a 3213sq m site within the Devon Plaza retail precinct and was sold with a recently renewed 10-year net lease to Woolworths Group, extending through to 2036.
The campaign generated strong competition, attracting more than 300 enquiries and narrowing to 22 formal offers, with five unconditional bids ultimately submitted.
Mr McIntosh said the buyer pool was dominated by private capital rather than institutional investors.
“We were primarily dealing with Melbourne-based family offices, alongside Asian market buyers, particularly those who live locally in the Doncaster area — as well as interstate private investors,” he said.
A single Woolworths sale has revealed the scale of investor demand for income-secure supermarket assets. Picture: NewsWire / Glenn Campbell
While commercial property activity has been subdued across several sectors, Mr McIntosh said supermarkets continued to draw demand due to a clear imbalance between supply and investor appetite.
“A metropolitan supermarket with a strong lease structure and long tenure simply doesn’t come up very often,” he said.
“When an opportunity like that does hit the market, demand is immediate and intense.”
Buyers were also drawn to the asset’s net lease structure, which removes exposure to outgoings such as land tax and locks in income well into the next decade, a feature that has become increasingly attractive as investors reassess risk.
Melbourne investors are increasingly favouring supermarkets as one of the safest commercial property plays.
Despite its proximity to the $26bn North East Link project, the Colliers National director of retail middle markets said the sale was underwritten by fundamentals rather than infrastructure-driven speculation.
“With any retail investment, immediate catchment and accessibility are critical,” Mr McIntosh said.
“In this instance, I’m not sure infrastructure projects like the North East Link materially influenced buyer behaviour.”
The Doncaster East Woolworths sits near the North East Link corridor, a major Melbourne infrastructure project reshaping access across the city’s east. Picture: VIDA
Mr McIntosh said the strength of the campaign has left a substantial pool of capital still chasing similar assets.
“We’re now working closely with all 21 underbidders to help them secure a comparable supermarket investment,” he said.
“That capital is very much looking to stay within the sector.”
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