Strata Assets in the Spotlight
Investors looking to shore up their income stream continue to turn to strata-titled Melbourne retail assets with long leases.
Fitzroys’ Chris Kombi and Ervin Niyaz have quickly sold 4 shops within Mosaic Village, at 53 Mosaic Drive, Lalor, for a combined $2.6 million.
The properties range in floor area from 54sqm to 101sqm and sold at an average yield of around 5%.
They include:
• Shop 2 - leased to Old Socks Laundrette on a 7+5-year term
• Shop 9 - leased to Fatwraps for 7+7 years
• Shop 3 - leased to Lord of Dough for 5+5+5 years
• Shop 6 - leased Mosaic Convenience Store for 10+5+5 years
Kombi said the properties were snapped up separately by SMSF investors within 2 weeks, demonstrating the huge appetite for passive, well-leased assets in the COVID-normal and ultra-low interest rate environment that is satisfied by strata-titled properties.
“Investors remain on the look-out for assets with secure income during the uncertainty of the COVID era, while the Reserve Bank has flagged interest rates will remain at their historical low for some time, and the share market presents volatility,” he said.
“Each of these assets were offered with long leases and have traded on an average yield of circa 5%.”
Kombi said investors had also noted that strata-titled property offers an easier management proposition. An owners corporation oversees the maintenance and low land tax liabilities don’t cut into the return, while the Mosaic Village properties are recently-constructed, offering strong tax depreciation benefits.
“Over the past 12 months we’ve seen a rush of enquiry from SMSF investors preparing for their retirement, or retirees wanting to buy a property that will immediately improve their income,” Niyaz said.
“Demand from this segment of the market has been growing and we expect that to continue in this environment.”
He added that well-located properties in high-growth areas continue to be sought-after. Mosaic Village is strategically positioned within the fully-developed, 650-lot Mosaic Living Estate in Melbourne’s northern growth corridor, and anchored by a state-of-the-art Nino Early Learning Adventures childcare centre, and comprises eateries, gym and mini supermarket.
Fortis Sees Strength in City Fringe Offices
Developer Fortis has thrown its confidence behind Melbourne’s city fringe office market, paying $26.9 million for a 1,850sqm site in Cremorne on which is will build an 9-level office building with an end value of $130 million.
The $40 million new build at the 65-81 Dover Street will deliver a 9,250sqm development with 8 floors of offices and ground floor retail.
Melbourne-based developer Tope Lane bought the amalgamated site in 2019 and secured a permit late last year before selling.
Fortis also bought the 1,298sqm corner site at 8 Brighton Street in nearby Richmond late last year with plans for a 10-level mixed-use development, and acquired a South Melbourne site for a new 6-level office development.
It is planning a $300 million mixed-use development on a 5,500sqm Smith Street site in Clifton Hill, directly opposite Development Victoria’s Fitzroy Gasworks project.
Local Developer Takes Historic Brighton Homes
A local developer has paid $15 million for adjoining historical Brighton home sites. They cover a combined 3,196sqm of land and include a dual-storey Victorian terrace at number 19 and a Federation villa, Dromara, built in 1915 at number 25. They were respectively purchased in December 2014 for $5.93 million and $4.8 million in 2018.
Next door, at 6 Grandview Road, is Carpe Group’s 3-storey 10-townhouse development.
Disclosure: The weekly Fitzroys Property Wrap is for information only on transactions in the Melbourne property market. Fitzroys provides this information as a public service. We are not purporting that all sales and leases within this report were transacted by Fitzroys. Terms/Privacy © Copyright 2021 Fitzroys.