Epping Trio Serves Up Safe Investments

Posted on 29th July 2020

Investors actively seeking income-producing assets continue to recognise well-located, securely-leased Melbourne retail and commercial properties as safe-haven opportunities.

Fitzroys’ Chris Kombi and Lewis Waddell have sold three strata retail properties within Lendlease’s Aurora Village in Epping for a combined $2.9 million.

The sales reflected a tight average yield of 5.4% and high average building rate of $9,355 per sqm. Each has a long, secure lease in place with fixed annual rental increases.

301 Harvest Home Road is leased to national tenant Bottlemart on an 8+8-year lease. 305 Harvest Home Road is home to Mediterranean eatery Suburban Grill on a 7+7-year lease while 309 Harvest Home Road has a 5+5-year lease to Middle Eastern grocer Aurora Groceries.

Each shop enjoys dual frontages to Harvest Home Road and the shopping centre car park, which has 305 parking spaces.

Fitzroys has now sold over $150 million worth of retail and commercial property across Melbourne since March.

“In a period of uncertainty, low interest rates and share market volatility, investors across the market are looking for reliable sources of income and have continually shown an enduring confidence in Melbourne retail and commercial property,” Kombi said.

The properties sold to three separate purchasers, including self-managed super fund buyers and more experienced investors.

Kombi said strata-titled properties have grown in focus.

“Strata-titled property offers an easier management proposition, with an owners corporation overseeing maintenance, while low land tax liabilities don’t cut into the return.

“These are recently-constructed properties that also offered strong tax depreciation benefits.”

He said SMSF investors have become prominent market participants, and have contributed further depth and competition to sales campaigns in addition to the pent-up demand for quality assets. Most recently, Kombi and Fitzroys colleague Mark Talbot sold 439 Keilor Road, Niddrie for $1.4 million at a tight 4.25% net yield to a SMSF investor, following a campaign that generated more than 130 enquiries.

Waddell said the properties are each leased to food and beverage-based tenants that have been able to trade throughout the COVID-19 period, which gave prospective buyers further confidence in their investment credentials.

“Liquor stores, eateries with a focus on takeaway and delivery service, and grocers have still been able to operate in recent months, and buyers are recognising the defensive nature of these assets.”

He said well-located properties in high growth areas continue to be highly sought after. Aurora Village is located in the heart of Melbourne’s northern growth corridor, anchored by high-performing Coles and Aldi supermarkets, and is home to multiple national and popular local tenants including Anytime Fitness, Liquorland, Coles Express, Select Pharmacy, Degani, TGS, Tatts and Epping Medical Centre.

The shopping centre is strategically positioned on a highly exposed corner site and close to new residential estates in various stages of completion. Aurora is forecast to house approximately 25,000 residents.

Fitzroys is now marketing a further two securely-leased retail properties within Aurora Village, and both are also leased to food and beverage tenants that are open for business. 303 Harvest Home Road has a 10+10-year lease to Harvest Pizza and Pasta, and 307 Harvest Home Road is leased to Aurora Butchers on a 5+5-year term.