A highly sought-after Coles supermarket is up for grabs

Coles is selling one of its freestanding supermarkets amid strong investor interest in pandemic-proof essential retail assets, particularly those in coveted locations.

The two-storey building at 725-757 Riversdale Road in the upmarket Melbourne suburb of Camberwell is expected to generate plenty of interest with both local and international investors, according to Kevin Tong from Stonebridge Property Group who is handling the sale along with Justin Dowers and Philip Gartland.

“Noting the blue-chip inner east location of Middle Camberwell, we are anticipating a strong level of interest from both local and Asian-based investors, especially those who have an affiliation with or live nearby the area,” he said.

The property is one of a number of supermarkets listed for sale in Victoria this year. Picture: realcommercial.com.au/for-sale

Freehold essential retail assets like this 3957sqm, full-line Coles are rarely listed for sale, Mr Dowers said.

“Freehold supermarkets in locations such as Middle Camberwell are inter-generational investments that are very rarely offered for sale,” he said.

“Whilst the investment characteristics are very strong, given the new 10-year net lease to Coles, the property fundamentals are even better; given the high underlying land value and significant replacement cost of the asset.”

The freestanding property, built in 2018, is being sold by Coles Group Property Developments.

The 4425sqm commercial zone 1 site has a 209-bay carpark. While Coles is the anchor tenant, there is also a Liquorland and two specialty retail stores.

The site, which is located nine kilometres from the Melbourne CBD,  generates an estimated annual net operating income of $1.6 million.

Retail investors have been increasingly looking for assets leased to essential and non-discretionary retailers, as a growing pool of buyers look for defensive, income-producing investments that have proven to be pandemic-proof.

Local and Asian investors chase inner-city supermarkets

The Stonebridge agents have noted strong demand from local and Asian private investors during supermarket sales campaigns this year.

A Woolworths Metro in Hawthorn sold this month for $12.85 million with Asian investors among the wide buyer pool showing interest in the 1827sqm strata supermarket in the prime inner Melbourne location.

This Woolworths supermarket which sits in the heart of the busy Glenferrie Road retail strip sold for $12.85 million. Picture: realcommercial.com.au/for-sale

Mr Dowers, who handled the sale of the Hawthorn Woolworths on behalf of a private family along with Mr Tong and Julian White, said strata supermarkets are very attractive to investors.

“Strata supermarket investments remain very popular as they give investors the opportunity to acquire a Woolworths, Coles or Aldi covenant within inner metro locations at price points below $20 million,” he said.

The Hawthorn asset appealed particularly to Asian investors, said Mr Tong.

“The strong level of enquiry from Asian buyers was driven by their attraction to the location – which they are more familiar with- and the blue-chip Woolworths covenant,” he said.

Buyers with a link to Asia were also among the bidders for a Supa IGA supermarket in Thomastown. A local family paid $11.3 million for the strata supermarket in July, Stonebridge’s Rorey James said.

“Given everything happening in the market, there is a real sense of flight to quality from local and Asian investors,” Mr James said.

Mr Tong said the 2032sqm Thomastown property was highly sought-after by Asian buyers.

“Asian buyer demand was very prevalent in this sales campaign with 31% of the enquiry coming from this buyer profile. This price point, tenant profile and security is in the sweet spot for a lot of the private Asian clients.”