2020 at a glance: Portfolio Auctions and essential service investments proven winners
Fuel, childcare and retail across the nation proved the most popular essential service properties for astute investors during 2020.
Commercial property agent Burgess Rawson has announced their end of 2020 results, showing a 92% success rate equating to 476 total sales nationally and a combined value of more than $900 million.
Burgess Rawson Director Raoul Holderhead said that investors flocked to essential service properties that traded throughout the pandemic.
“There was a distinct flight to quality,” said Mr Holderhead. “Investors turned to essential service investments such as childcare, petrol stations, fast food, liquor and medical across both metropolitan and regional cities.”
Results also reveal that yields compressed during the calendar year with results as low as 2.06%.
“That great result was for a Viva Energy fuel station in Camberwell, Victoria that sold for $6.5 million,” said Mr Holderhead. “And a 7–Eleven investment in Wahroonga, NSW delivered another low yield of 2.5%. However, retail fuel was not the only asset class to deliver great results. We saw fantastic yields across essential service sectors including childcare and liquor.”
Burgess Rawson achieved the lowest childcare investment yield for Melbourne’s growth corridor with the sale of an Imagine Childcare Centre at Cranbourne West for $6.91 million with a yield of 5.58%.
In another record–breaking result, Burgess Rawson sold a Dan Murphy’s in Wangaratta Victoria for $8.1 million on a yield of 4.34%.
Mr Holderhead added that Burgess Rawson was the most active commercial agent for on-market leased investment sales over $1 million during COVID-19.
“While our competitors were advising vendors to hold properties until next year, we knew that the demand was certainly there. Over the preceding 12 months, demand had been intensifying with a growing pool of underbidders and new investors looking for defensive assets,” said Mr Holderhead.
Burgess Rawson pivoted quickly to market essential service investments across Australia.
“The lockdowns in Melbourne provided us with an opportunity to adapt our iconic Portfolio Auctions which proved very successful.
“Restrictions changed the way we did business. We placed a lot of emphasis on photography, videography and virtual tours to address the inability to physically inspect properties,” said Mr Holderhead.
Investors were also provided multiple way to bid including online, via phone and in person at a Sydney auction house.
“Buyers really embraced the change despite the fact we picked up our Melbourne auction and moved it to Sydney,” said Mr Holderhead. “We estimate that 57% of our sales were bought sight unseen including an increase in cross border and international purchases.”
However, the appeal of an in-house auction still prevailed.
“While feedback from bidders was that the online and phone options were effective, there is something special about the buzz and transparency of physically being in the auction room,” Mr Holderhead said.
Burgess Rawson Melbourne’s first Portfolio Auction for 2021 will be held on Wednesday 24 February at the Crown Casino.