First-time investors keen to dip their toes into commercial property

Megan Neil

First published 19 February 2021, 11:43am

Childcare centres are headlining a commercial property portfolio auction. Picture: realcommercial.com.au/buy

First-time investors keen to get into the commercial property market are chasing entry-level opportunities in the first big portfolio auctions of the year.

Burgess Rawson director Raoul Holderhead said there was strong interest in the February auctions from first-timers looking to dip their toes into commercial property.

“First-time investors have been starved of stock so enquiry is extremely high,” Mr Holderhead said.

“Vendors that have waited to bring their properties to market will benefit from this built-up demand.”

Mr Holderhead said there was also a large pool of underbidders who missed out in last year’s portfolio auctions, who were actively searching and ready to invest.

Burgess Rawson has a $62 million portfolio of 22 properties going to auction in Melbourne on 24 February, with its Sydney auction a day earlier offering another nine properties with an estimated $25 million value.

Essential services like childcare are in high demand from property investors. Picture: realcommercial.com.au/buy

Essential services properties that traded through the coronavirus pandemic remain the most coveted investments.

Mr Holderhead predicted childcare, retail fuel, supermarkets, liquor and medical would be the big winners of the first quarter of 2021.

There is a diverse range of properties on offer at the auctions, with the expected prices within the Melbourne portfolio ranging from more than $475,000 for a retail premises leased to a real estate agency in coastal Victorian town of Lakes Entrance to $8.7 million for a service station/retail site in Queensland’s Gladstone Central.

This Gladstone service station is at the top end of the price range in the portfolio auction. Picture: realcommercial.com.au/buy

Mr Holderhead said there were several entry-level investments, including essential services properties.

“There has been a distinct lack of stock available in the sub-$850,000 range,” Mr Holderhead said.

“To bring seven to eight properties in this range in one day and in one place is unheard of.”

The entry-level opportunities include four properties in a centre anchored by major retailers Aldi and Chemist Warehouse in Hampton Park in Melbourne’s south-east.

A dentist, medical centre, liquor store and pizza shop are all up for sale. Picture: realcommercial.com.au/buy

The Bottlemart liquor store, medical centre, dental clinic and pizza shop each have price expectations below $850,000 and will be sold individually at the Melbourne auction.

Childcare centres are headlining the Melbourne auction with six on offer including one close to the beach at Mount Martha on Melbourne’s Mornington Peninsula that is expected to sell in the low-to-mid $5 million price range.

Two other childcare centres, also with long leases and further options, come with higher price expectations: one in Truganina in Melbourne’s western suburbs and a new centre in the Canberra suburb of Throsby.

There are also childcare centres in regional Victoria within a price range that is considered to be entry level for the sector: one in Castlemaine that is expected to sell in the $1.4 million to $1.6 million range and another in Bairnsdale with a $1.3-1.4 million price guide.

Burgess Rawson childcare specialist Adam Thomas said regional childcare’s strong run was set to continue, with commercial property investors drawn to the potential for higher yields.

“We are certainly seeing a shift to regional destinations, given the higher yields on offer, and it’s been further accelerated by the flow-on effects of Melburnians seeking a tree change after Victoria’s extended COVID lockdown,” Mr Thomas said.