One of two Chinese investors
who flew to Melbourne for the auction of a Coles supermarket in bayside Mentone
last week walked away with the title.
The centre, 81 Mentone Parade, exchanged for $15.3 million – reflecting a 3.4 per cent passing yield which marketing agency CBRE said is the tightest for a supermarket investment since a Coles-anchored Clayton complex traded last year (on a 2.57 per cent return).
Three China-based investors – which the agency said were introduced through its Asian Services Desk – drove the Mentone bidding beyond $12 million.
The asset includes a 2854
square metre recently refurbished freestanding supermarket returning annual
rent of $519,785.
Coles signed a 10-year
lease, with a 10 year option, in 2017.
The 2600 sqm land holding is spectacularly located for a high density residential redevelopment – being on the revered ‘beach-side’ of Como Parade, on a corner (of Brindisi Street), opposite Mentone Reserve and at the southern edge of a retail village surrounding the suburb’s train station.
Justin Dowers said this
didn’t go unnoticed with buyers: demand for the asset “bolstered” by the
property’s long-term value-add and development prospects.
“More and more we are
taking enquiries from prospective buyers with questions on zoning, site access
and population growth forecasts,” Mr Dowers said. “The recognition of
long-term, value-adding with metropolitan retail opportunities is the new black
with what had been a relatively passive retail investor cohort, and it has
swelled their ranks”.
Mr Dowers marketed Coles
Mentone with colleagues Mark Wizel.
Kevin Tong, who heads CBRE’s
Asian Services Desk, also worked on the deal.
Mr Wizel said that over
2019 there had been a trend towards “defensive property investments” with
neighbourhood centres and standalone supermarkets doing particularly well
despite the significant negative factors affecting the retail sector.
`As the year progressed we
have taken an increasing number of enquiries from both traditional retail
investors and a group of investors newly attracted to this type of asset,” Mr
“That includes regular
equity market investors chasing yield and security, and those who are also
attracted to the potential development upside.’’
Mr Wizel said this increase
in demand “put a brake on any blow out in yields”.
“While yields for
standalone supermarkets softened over 2019, they had come off a very strong
retail market highlighted by the sale of Coles Clayton in early 2018 on a
record 2.57 per cent yield.
“This year we have seen
yields hover around 5.5 per cent following an average closer to 4.5 per cent
over 2018 but this result unambiguously indicates demand for this product
remains very strong,’’ Mr Wizel added.
Coles Clayton, which sold
for $17.115 million, holds the Victorian record yield for standalone
supermarkets at 2.57 per cent, the agent said.
The previous record [low yield] was held by Woolworths Middle Brighton which sold for $32 million, a 3.8 per cent return, in 2016.
Other Victorian standalone supermarket deals struck since 2018 are in the CBRE table below.