First-timer buys plaza as regional assets attract overseas interest

A first-time Chinese investor has paid $4.5 million for a Victorian shopping plaza as regional assets attract international interest.

Stonebridge Property Group agents said the sale of the Spotlight Plaza, which is anchored by the fabric and craft retailer, in Sale highlighted the increased interest from international Asian investors in regional investments amid the COVID-driven regional population shift.

The buyer had missed out on other similar investment opportunities recently, said Kevin Tong, director of Stonebridge’s Asia practice team.

“The property sold for $4.55 million, which equates to an approximately 5.2% yield, to a first-time Chinese investor who has recently missed out on a few other investments with our team,” Mr Tong said.

“We are seeing increased interest from international Asian investors for regional investments, especially given the growth they are witnessing firsthand in some of these core regional hubs.

“When you couple this with long leases to national tenants it makes a healthy investment for what many offshore groups are looking for.”

The 6774sqm site was sold on behalf of Melbourne-based fund manager Castlerock, which recently acquired the Icon office tower in Queensland’s Ipswich for $145.2 million.

Castlerock director Adam Bronts said the Spotlight Plaza had performed well under the group’s ownership.

“We’ve held the Spotlight asset for over 10 years and it has performed well during that period for our investors, many of them local,” Mr Bronts said.

The Spotlight Plaza in Sale sold for $4.55 million. Pictured: Supplied by Stonebridge

Stonebridge director Rorey James said the international expressions of interest campaign was hindered by travel restrictions during Victoria’s fourth COVID-19 lockdown, which meant Melbourne-based investors could not conduct inspections.

Mr James said the campaign was extended until 30 June, which still allowed groups to submit offers before a stamp duty increase in Victoria on 1 July.

“The decision paid dividends for Castlerock, with the three most aggressive groups all putting forward unconditional contracts – clearly wanting to take advantage of the saving,” Mr James said.

Mr Bronts said the result exceeded Castlerock’s expectations.

“To achieve a yield in the low 5% range exceeded our own expectations and highlighted for us the demand for quality assets across Australia,” he said.

The Spotlight Plaza has a 10-year gross lease to Spotlight and three boutique shops, which combined provide a total net annual income of about $240,000.

The coronavirus pandemic has strengthened investor demand for “pandemic-proof” supermarkets and neighbourhood shopping centres, boosting interest in those assets in regional areas.

Stonebridge’s recent deals also include the sale of a Coles-anchored shopping centre in Victoria’s Swan Hill for $20,075,000, on a yield of 5.08%.

In what the agency described as a hotly-contested auction, a retail site in Victoria’s Bendigo with seven leased shops sold at auction for $6.75 million, more than $2 million above the vendor’s reserve.

Stonebridge partner Justin Dowers said the COVID-driven regional shift and Victoria’s temporary 50% stamp duty saving for regional commercial property was creating a huge attraction towards regional investments.

“In recent months we have seen regional Victorian retail yields compress to a level close to, and in some cases in line with, metropolitan Melbourne,” Mr Dowers said.