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Fringe sales on investors’ minds

A Potts Point restaurant at Rockwell Crescent tenanted on a long-lease by a founder of the Fratelli Fresh group is set to be auctioned by LJ Hooker Commercial Sydney. Photo: supplied 115 New South Head Road, Edgecliff, is being sold. Photo: supplied
SuZhou Night Recruitment

Investors are turning their attention to the city fringe as they seek higher-yielding bricks and mortar.

The assets range from a bar and restaurant to the well-known Bob Jane T-Mart site in New South Head Road.

Agents said the sales reflect the high demand for property at a time of record low interest rates.

Investors are also seeking sites that offer residential development opportunities.

At Potts Point,  the ABC Restaurant and Bar,  on a long lease by a founder of the Fratelli Fresh group, is set to be auctioned by LJ Hooker Commercial Sydney.

The 270 square metre retail investment at Rockwall Crescent is newly occupied by the restaurant/bar – led by Nina Gravelis, a member of one of Sydney’s hospitality families – on a recently signed eight-year lease with another 10-year option.

The L-shaped ground-floor restaurant is the latest addition to the inner-city fine dining precinct, which includes  Yellow, Cho Cho San, Gastro Park, and Apollo. It also reflects the changing nature of Potts Point with the lock-out laws seeing many pubs close and be replaced by upmarket food and bars.

Selling agent and director of LJ Hooker Commercial Sydney James Griffiths said ABC Restaurant and Bar had strengthened the precinct’s dining profile among investors.

Late last year, the nearby Macleay Street freehold housing Asian cuisine specialist Billy Kwong sold on a sub-5 per cent yield.

“ABC Restaurant and Bar is the latest member of Potts Point’s cosmopolitan dining scene, where hatted restaurants can be found around every corner and retail investments are tightly held,” Mr Griffiths said.

Nearby is another sale of  property at 115 New South Head Road, Edgecliff, a 348 sq m site, on a long lease to Bob Jane.

LJ Hooker Commercial Sydney’s director sales and development sites, Steven Kruyer is advising on the sale and said its position on the corner of New South Head and Glenmore roads, gives it the highest exposure positioning than any other property along this busy road, from Vaucluse to the city.

“Currently a secure investment with a lease to Bob Jane and then the opportunity to develop a property with substantial exposure that will reap rewards for any business,” Mr Kruyer said.

“I’m selling on behalf of a private investor who has owned the property since June 2007. I believe that there will be plenty of interest in this property, as I get regular calls from serious buyers searching for this type of secure investment with future development potential.”

The residential boom has also led to a significant amount of mixed-use developments with retail on the ground floor and a readymade market of residents above the retail.

“In the past private super fund investors focused on the apartments forgetting about the retail and paying 2-3 per cent  gross yields to buy an apartment.

“The astute investors are now turning to the retail where they achieve 4.5-5.5 per cent  net yields with a secure three-to-five-year lease where they don’t have to turn over tenants every six months,” said Nick Heaton, head of private clients CBRE.

“Inquiry has jumped 35 per cent  for retail strata investments as the market is more educated on this asset class and take comfort from the tax advantage through depreciation, no capital expenditure forecasted for 10 years due to the property being brand new,” Toby Silk, of CBRE North Shore, said.

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