The Burwood Road asset, which ticks all the boxes the modern day private investor wants including a long lease to a secure tenant, high rent with built in increases, and depreciation benefits – is believed to be under negotiation at a price of more than $11 million.
It is the latest in a string of private investor sales of around $10 million – which includes the former Surf Dive n’ Ski store in Bourke Street which sold for $9.3 million against a reserve of $7 million, and a retail arcade on Swanston Street which sold for $13.05 million against a reserve of $8 million.
Both sold to individual private investors who had easy access to the funds.
“There’s been a marked increase in the number of private investors seeking assets of more than $10 million this year,” said Fitzroys director Peter Weatherby, who was marketing the Volkswagen property
Wealth effects generated from the recent residential property surge, coupled with strong sharemarket returns is driving private investor demand, which was until recently considered confined to the sub $5 million category, he said.
Knight Frank director Michael Hede says interstate investor demand, particularly from the resources-rich states of Queensland and Western Australia, is one of the biggest trends to develop this year.
“In terms of capital growth, Melbourne’s commercial property sector still has a bit of catching up to do in comparison to Brisbane and Perth, and buyers from interstate can see there’s plenty of upside,” says Mr Hede. “Nationally, there are hundreds of private investors around Australia looking at real estate assets of around $10 million.”
“Not only are they seeking securely leased properties, they are also willing to take on redevelopment and refurbishment of buildings prior to leasing.”
CB Richard Ellis senior manager retail investment, Mark Wizel agrees, adding the recent sale of retail assets at Freshwater Place in Southgate and the Chevron project in Prahran also aroused international interest, particularly from China and Vietnam.
Mr Wizel said rising interest rates, designed to slow the pace at which the economy moves, has done little to dampen interest. “Most private investors factor interest rate rises in their purchase price.”