Football club president Mark Lo Giudice sells Gisborne Square to Samuel Property

Carlton Football Club president and property investor Mark Lo Giudice has sold the Gisborne Square retail complex in Melbourne’s outer north west to local developer Samuel Property.

The row of 10 shops traded for $6.15 million at an auction last week contested by six parties.

Based on the annual rental return ($329,000) the 1068 square metre centre with 56-bay rooftop car park is exchanging on a 5.4 per cent yield.

Mr Lo Giudice, via a company, Atlanta Sands, paid $3.725 million for Gisborne Square in 2015.

He was represented for the sale by CBRE’s Rorey James, Mark Wizel, Justin Dowers and Kevin Tong.

About 50 kilometres from the Melbourne CBD, Gisborne was not many years ago considered a satellite town. Now it is marketed as part of the metropolis.

Plenty of options here

Gisborne Square (outlined) offers 69 car parks, 56 on the roof.

Gisborne Square has great redevelopment potential, the shops occupying just 35 per cent of the 2013 square metre Commercial 1 zoned block.

The rooftop could be replaced as the floor of a straightforward extension incorporating, for example, offices, a childcare centre, medical facility or gym.

Alternatively, given the zoning, the site could make way for a multi-level complex containing residential atop a basement garage and lower level commercial.

Samuel Property managing director Illan Samuel – another Blues supporter – said Gisborne Square is a long term play for the company but that in time it may explore an extension into both the land and airspace.

Some tenants are on leases which don’t expire for up to 10 years. Occupiers are also on agreements with fixed annual rent increases.

The property at the south west corner of Hamilton and Brantome streets, is in the suburb’s retail centre.

Asset sold for more than expectation

Six bidders competed for Gisborne Square after the opening offer of $4.9 million.

The result, well over the c$5.5 million guide, values every square metre of building area at nearly $6000.

“This was a significantly sharper yield and double the land and building rate achieved four years earlier for the [suburb’s] Foodworks supermarket,” Mr James said.

“The Foodworks sale also attracted offshore interest, selling to an investor from China for $7 million on a yield of 6.05 per cent”.

Mr Wizel said Atlanta Sands had gained a 65 per cent premium since holding Gisborne Square.

“This was a very strong result and one which we are going to see more of into 2020 as a result of the lack of stock and attractive yields on offer, along with factors such as development upside and positive regional growth forecasts.

“Investors are increasingly looking to property for yield and there is little indication that bonds and bank deposits are likely to offer up more attractive returns in the short and medium term,” the executive added.

Multiple access points, expansive street frontage (91 metres) – and the zoning, offered buyers “very good longer term value-add possibilities through development and rental growth,” Mr Wizel said.

“Yields are obviously the key element but development prospects down the track are being noted on these town centre sites and swelling the ranks of both local and international buyers.

In July, ID_Land paid $61.1 million for a 75 hectare farm at 39 Willowbank Road, Gisborne, with plans  to replace it with a $250 million housing estate, plots of which it recently started marketing for sale.

Ten rented shops return annual income of $329,000.
Telstra rents the space at the busy corner of Hamilton and Brantome streets.

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Marc Pallisco

A freelance property analyst and journalist, Marc is a co-founder of realestatesource.com.au.

Marc Pallisco