Coastal Woolworths fetches $25m amid strong private investor interest

A private investor has paid $25.1 million for a Woolworths in the Victorian seaside town of Torquay amid strong interest in supermarkets as a “go-to” investment during the coronavirus pandemic.

The Melbourne-based investor purchased Woolworths Torquay Central from the family that developed the 2980sqm freestanding supermarket in 2004.

Standalone supermarkets have long been an investor favourite but the pandemic has added to demand for properties with blue-chip, daily needs tenants like Woolworths, Coles, Aldi and IGA.

Agents Stonebridge Property Group reported strong interest from private investors in the Surf Coast property, which was listed for sale in October with price expectations of about $20 million.

“What became clear as soon as the marketing campaign for Woolworths Torquay Central commenced was the sentiment for this type of investment product had heightened, particularly due to an increase in supermarket sales performance further cementing these investments as the ‘go-to’ recession/pandemic-proof investments, similar to that of certain logistics assets,” Stonebridge partner Justin Dowers said.

The property sold at a yield of 3.65%, which the Stonebridge agents said represented a record yield for a regional Victorian supermarket development.

Stonebridge director Kevin Tong said all 14 offers came from private investors, adding that the most aggressive buyers represented high-net-worth individuals who were not necessarily common industry players.

“These buyers were individuals that had ongoing business interests outside of property and an increased appetite to shift a growing wealth pool (due to business profits) into a secure investment like Woolworths Torquay Central,” Mr Tong said.

Agents say the Woolworths Torquay Central sale shows the increased interest in regional commercial property. Picture: Stonebridge Property Group

The agents said the sale also showed there was heightened investor interest in regional commercial property, particularly in coastal locations like Torquay, a popular holiday and surfing destination.

Working from home and people seeking a sea or tree change during the pandemic has led to population growth in regional areas and an increase in general sentiment towards key regional hubs.

The Victorian government’s move to bring forward 50% stamp duty savings for commercial and industrial property in regional Victoria was another factor in investors shifting their attention outside metropolitan boundaries, Mr Dowers added.

“Due to the population growth that regional Victoria is experiencing, in addition to the 50% stamp duty savings, it is becoming evident that regional Victorian retail yields are compressing to a level close to, and in some cases in line with, metropolitan Melbourne,”.