Property in Upper Mount Gravatt – sold for $7.5 million – achieves record 2.73 per cent yield in climate of strong competition and shortage of investment assets.
A shortage of available commercial investments with solid income potential and value-add development upside in Brisbane is creating strong competition amongst investors with a recent $7.5m sale of Logan Court in Upper Mount Gravatt achieving a record 2.73 per cent yield.
The two level 2,484 square metre commercial building at 2092 Logan Road was purchased by DPA Property Group Pty Ltd who is also the adjoining property owner.
Logan Court is positioned on a 3,976 square metre land holding in the heart of Upper Mount Gravatt, with prominent 32 metre frontage to Logan Road and approximately 60,000 cars passing daily. The property also offers onsite car parking with 77 allocated bays.
At a glance:
Hunter Higgins and Philip O’Dwyer of Colliers International marketed the property via an Expression of Interest campaign which generated seven offers from local and interstate investors.
Higgins said that at the close of the EOI three parties had been shortlisted, with DPA Property Group being the strongest contender with a cash unconditional contract settling within a month.
He said the Group knew the area well and could see the future potential of the asset adjoining their existing property and being across from the Westfield Garden City and within Principal Centre zoning with development potential of up to 15 storeys (STCA).
“We understand their intention is to refurbish the asset,” Higgins said.
“The WALE is currently under one year across 12 tenancies and they will work through the tenancies over time as they vacate or renegotiate leases and fitout plans with the existing tenants who wish to remain.
“Current net income is $205,000 per annum with a potential fully leased income being $630,000 per annum.”
Mr Higgins said the Brisbane market was attractive to investors as it is on the cusp of a significant growth phase with Brisbane LGA annual population growth outperforming Australia and Queensland overall over the last five years.
The city is also going through its biggest ever infrastructure boom of over $45 billion in projects currently underway, he said.
“The Brisbane metro office market is the third most improved market throughout Australia with vacancy tightening nearly 2 percentage points,” Higgins said.
"Net demand reached an eight-year high of circa 32,630 square metres in the first half of 2019 and while gross rents have been increasing gradually, incentives are starting to decline and yields across all sectors have tightened.”
Mr O’Dwyer said the market was the most buoyant they have seen in a long time.
“On-market assets with passing income and value-add potential are very limited, and there is a good depth of purchasers considering the low interest rates,” he said.
“This is resulting in strong sales rates, sharpening yields and decreasing settlement time.
“Highly competitive investors are paying a premium for these types of income producing value-add assets, so now is the time for owners who are considering selling to be taking advantage of the strong market conditions and taking their properties to market.”
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