Healthy Result For COVID-Proof Investment In South Yarra

Posted on 02nd December 2021

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Well-located bricks-and-mortar assets with quality leases continue to be pursued by investors, and the resilience of medical tenancies remains a drawcard as a COVID-proof South Yarra property achieved a very strong sale result.

Fitzroys’ Chris Kombi and Chris James sold Shop 6, 300 Toorak Road, South Yarra to a local syndicate for $2.825 million following a campaign that generated more than 80 enquiries.

The sale price reflected a high building rate of $12,200 per sqm.

Positioned on the ground floor of developer and vendor LK Property Group’s "Gisele" project, the strata-titled 232sqm property was offered with a 10-year lease plus options to major medical group My Clinic.

Kombi said the property ticked all the boxes of a secure, passive income-producing bricks-and-mortar investment ideal for the COVID-normal and ultra-low interest rate environment.

“The circa-5% return that so many well-leased strata properties compares very favourably to what’s on offer with money sitting in the bank. We had interest from SMSF investors, syndicates and local buyers looking to shore up their immediate income.”

“Strata-titled properties also offer an easier management proposition as an owners corporation oversees maintenance, and low land tax liabilities don’t cut into the return. The Gisele development was recently constructed, offering strong tax depreciation benefits.”

He said the rush of enquiry from investors preparing for their retirement, or wanting to buy a property that will immediately improve their income, began early last year.

“This has run right throughout 2021 and expect the demand from this segment of the market grow further in the environment.”

James said medical tenancies have proven to be quite resilient throughout COVID.

“Investors have sought out properties with tenants that have been able to trade throughout the uncertainty of the past two years, and the long-term lease to a quality operator made this an excellent COVID-proof investment,” James said.

He added that a quality location is a timeless fundamental. The property is positioned close to the Forrest Hill precinct and LK Property’s Capitol Grand tower, the Chapel Street and Toorak Road lifestyle strips, and at the doorstep of multiple tram routes and South Yarra station, giving the tenant an exceptionally dense, well-connected immediate catchment with further growth prospects.

The suburb’s development pipeline includes the $1.5 billion overhaul of the Jam Factory precinct, Goldfield’s new office tower at 627 Chapel Street, and South Yarra Square and Hotel Claremont are both set to be transformed after finding new owners, while US company Greystar is developing Australia’s largest build-to-rent project close by in the Forrest Hill precinct.