Bidding frenzy sees iconic Abbotsford pub sell for $3.18m

Melbourne’s inner-city pub market remains as hot as ever, with Abbotsford’s Park Hotel the latest watering hole to sell amid intense investor interest.

In a keenly-contested auction on Friday the pub, on the corner of Nicholson and Vere streets, sold to a local buyer for $3.18 million, nearly $1 million above reserve.

With the venue currently leased for $83,340, the sale price represented a tiny 2.45% yield.

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The 153-year-old pub currently operates as a hotel, with a front bar, dining room, commercial kitchen and beer garden, as well as upstairs accommodation.

The hotel has an extensive beer garden.

The 480sqm corner site is leased to its current operators until July next year, with a further three-year option expected to be taken up.

Knight Frank’s Paul Pellegrino, who marketed the property with Andrew Greenway, says they had expected the hotel to sell for between $2.2-2.3 million.

“It was a phenomenal result, well above where we anticipated it to go,” he says.

“In the same breath it didn’t surprise us, given the level of enquiry and interest during the campaign.”

The Park Hotel is leased to its current operators for the next four years.

Pellegrino says the hotel attracted significant interest from owner-occupiers, and is expected to be redesigned once the current lease term expires.

“The campaign was probably driven more from an owner-occupier point of view, with food and beverage operators looking at it.”

“They’re going to reposition it after the four-year period (ends). So they’ll let the sitting tenant trade out of it and then they’ll look at repositioning the whole building.”

“That’ll be probably a component of food and beverage as it is now, and then the first floor they’re looking at doing accommodation-style.”

“Whether that’s shorter or longer term stay, I’m not 100% sure.”