SMSF Investors’ Growing Presence in Melbourne Strip Retail

Posted on 03rd December 2019

Fit4015 1 572 Swan Street Richmond Markup 6115

With interest rates at historic lows, self-managed super fund investors are growing their presence in Melbourne’s retail and commercial property landscape.

In the latest deal, Fitzroys agents Chris Kombi and Jordan Ceppi have a sold a ground-level café investment at the entrance of Botanicca Corporate Park, Shop 1, 572 Swan Street, for $1.701 million at a 6.4% net yield.

The property encompasses a generous 500sqm, comprising a modern fully-fitted café of 310sqm, with a further 190sqm of outdoor seating.

Leased to experienced café operator trading as The Shed on a 5+5+5 year lease, the property is currently returning a net rental of $110,000 per annum approx. plus GST, with fixed annual increases of 4%.

Positioned on the corner of Swan Street and Central Drive at the entrance of Botanicca Corporate Park, arguably the premier commercial precinct in metropolitan Melbourne, the property provides highly exposed corner frontage of 34 metres.

Kombi said the Deadline Private Sale campaign saw a competitive process that attracted a range of investors, with a SMSF investor winning out.

“Investors are seeking strong income-producing, securely-leased assets in locations with healthy growth prospects. Following further recent interest cuts, SMSF investors are looking in greater numbers for solid returns and are playing a more prominent role in the Melbourne retail investment market,” Kombi said.

“The property’s long-term lease to a successful tenant and strong income with fixed annual rental increases presented an ideal set-and-forget, low maintenance investment.”

“Further underpinning its future prospects is the property’s future-proof location, surrounded by a mix of high-grade commercial, hotel accommodation, tertiary education and high-density residential buildings and developments, boosting the worker and residential catchment.”

Major companies occupying neighbouring buildings include David Jones, Country Road, Harris Scarfe, GE, Fulton Hogan and Wells Fargo plus many more, plus the 4.5-star Marriott Business Class Hotel and The University of Melbourne.

The property also benefits from its close proximity to the Swan Street tram network and the Heyington and Burnley train stations, as well as easy linkages to the CBD and broader Melbourne via the Citylink and Monash M1 Freeway.

Ceppi said Fitzroys has now sold three Melbourne retail investment properties to SMSF investors in the past two weeks.

“Investors are seeking retail assets across Melbourne with strong fundamentals in large numbers. This will likely continue in line with the low interest rate that is expected to remain long-term.”

Fitzroys recently sold Shops 19-20, 190 Jells Road in Wheelers Hill for $2.4 million to a SMSF investor at a 5.2% yield, with a 10+5+5-year lease to renowned hair salon Rokk Ebony Properties. That followed the sale of 2-6 Copernicus Crescent, Bundoora, also a high exposure quality café investment, which was bought by a SMSF investor for $2.6 million at a 5.5% yield and with a 5+5-year lease