Low interest rates still good news for vendors

PROSPECTIVE buyers have frustratingly watched another month of low interest rates roll on following the Reserve Bank of Australia’s decision not change them at its monthly meeting last week.

Commercial agents understand that the group-think of many property owners at the moment is to sit it out a little longer before taking their investments to market, in a bid to see competition tighten and prices climb.

However, they warn that no one can accurately predict the flashpoints at which interest rates will start to rise, making borrowing less attractive to potential buyers, nor when other vendors will begin to offload their assets creating a glut that will push property prices down.

Meanwhile, the dust keeps gathering on the funds of willing buyers as potential vendors watch them strut their stuff from the catwalk sidelines.

No one can accurately predict the flashpoints at which interest rates will start to rise, making borrowing less attractive to potential buyers.

Fitzroys’ James Gregson agrees that the historically low interest rates and the absence of much quality stock is keeping demand strong.

“We are seeing an excellent depth in enquiry levels from perspective purchasers,” Mr Gregson said.

“There exists now a real opportunity for potential vendors to capitalise on outstanding market conditions.”

Gregson cites the sale of 93 Furlong Rd, Cairnlea, by the Brimbank City Council in Melbourne’s west as a transaction that did not need nor want to wait on the sidelines.

The substantial infill development site just 15km from the CBD  went under the hammer for an impressive $6.41 million to a local developer.

Ranging across almost 2ha, the property had been earmarked for council offices, but when a new civic centre was built further south in Sunshine central, the Cairnlea address became surplus to the municipality’s needs.

The site is opposite Cairnlea Town Centre, a 30-shop hub anchored by a Coles Supermarket, and sits in a mixed-use zone with large frontages to both Furlong Road and Cairnlea Drive.

Advertising stitched  up for Perth building

Knight Frank has been appointed to sell the headquarters of one of Western Australia’s iconic advertising agencies – Marketforce.

The three-level building at 1314 Hay St, Perth, was recently refurbished by the tenant of 40 years  to complement the state-of-the-art air-conditioning system newly installed by the property’s owner.

Returning $650,000 a year, it is fully leased to Marketforce until 2019 with further options to extend the term.

The West Perth address puts the 1900 sqm building near ample street parking, public transport and numerous lifestyle amenities and services.

It also has its own 37-space under cover carpark, two uncovered loading bays and two street frontages.

Tony Delich, of Knight Frank, said that from a redevelopment perspective the 1250 sqm of land has a plot ratio of 2:1.

“But this could be increased to 3:1 for residential and given an additional 20 per cent  bonus for short term accommodation.”

He said he expected interest from local and overseas investors in the offers-to-purchase campaign, which  closes on  May 22.

Plans give buyer insight

After fielding more than 130 enquiries out of the 3500 online views of 368 Burnley St, Richmond, the property was sold for considerably more than the reserve before the auction day arrived.

Although the final price paid by a local developer was not disclosed, there was an expectation it would transact in the low $3 million mark.

Bradley Ellul, of selling agents CVA Property Consultants, said the clincher exceeded the reserve  nicely.

“After receiving several offers before the auction, the vendor decided to accept one and sell the property privately,” Mr Ellul said.

The site, a rare infill one for an inner suburb, covers 933 sqm with a frontage to a residential street at the rear and another onto a busy Richmond shopping strip.

Mr Ellul said it was sold with an approved permit for a six-storey building containing 40 apartments and two ground level shops.

While the new owner is not obliged to develop the plot in line with the meticulous designs submitted to council, he knew for certain what the local council would rule “in” or “out” from a planning perspective in this location before he made the offer, he said.

Local investors revved for action

Despite a soaring interest in Melbourne CBD real estate from Asian investors, both the vendor and buyer of 478 Elizabeth St were private Australian individuals.

Last week’s selling price of $6.05 million for the retail property represented $17,742 a square metre for a passing yield of 1.59%.

The double-storey, free-standing building – whose latest tenant trades as Motorcycle City – has a high rental demand as  well as potential for redevelopment.

In a busy area, close to the heart of the city and well served by public transport, the property is also near Victoria Market, universities and top-end retail hub Melbourne Central.