Non-Discretionary Supermarkets Still in Demand from Domestic and International Investors
CBRE Victorian Freestanding Retail Investments have just transacted through auction the Supa IGA Supermarket in Ringwood East. Owned and run by the Corcoris family, the IGA supermarket was offered with a leaseback with a 10 year lease. The supermarket sold under the hammer for $7,340,000 on a yield of 5.4%, with multiple bidders bidding at auction.
The CBRE Team Kevin Tong, Joseph Du Rieu and Leon Ma brokered the deal, saying there was a clear demand in the market for good quality income producing assets in 2019.
“The supermarket was a suitable asset for both domestic and international investors, given the long lease tenure and the commercial land parcel being opposite the Ringwood East Train station.” Commented Mr. Du Rieu
The Corcoris family had been running the supermarket since the 70’s and has really become part of the community in Ringwood East service a lot of the locals in the area. The supermarket was spread across 2,100sqm commercial 1 zoned land, with a 10 year net lease with a net income of approximately $400,000 per annum.
There is still confidence in the buyer market especially for fundamentally sound blue-chip commercial property investments. In the case of the IGA Supermarket in Ringwood East there were 3 key aspects which drew interest from buyers being the lease term, the positioning and underlying land holding.
Kevin Tong added “If you compare returns investors are getting on other investments in the market, it is clear to see why commercial property is still in demand. Taking the 10 year Bond rate as an example, there has always been a positive spread, and with forecast for further compression currents yields for supermarkets still seem attractive.
The property sold to an International Asian investor providing more confidence there is still capital from China seeking good quality and blue chip investments. “The ultimate purchaser had historically only been in residential developments, however they wanted to begin diversifying into more income producing investments and IGA Ringwood East ticked the boxes for the family.