The George Hotel, on a high-profile corner block opposite the South Melbourne Market, has sold to a Chinese investor for $5.2 million.
On a 406 square metre parcel zoned Commercial 1, the asset (pictured top and bottom) returns annual rent of $253,146. On that basis it is selling on a yield of 4.9 per cent.
In operation for more than 150 years, the occupant is nine months into a five year lease then has three more five year options.
Despite this, the brokers promoted the “significant future development upside” of 139 Cecil Street, on the south-east corner of York Street, and walking distance to the Melbourne CBD.
The hotel is near to a 4641 sqm site at 80-84 Cecil Street which sold for $41 million last year to the Langer family’s GLG Group and is now the subject of an eight-level complex containing 14,845 sqm of office space and 800 sqm of retail.
“The sale of The George Hotel is a clear reflection of the hot demand for blue chip investments within Melbourne’s most premium suburbs,” Savills director Nick Peden said. “The sale result is evidence that buyers are flocking to A-grade commercial property and are willing to accept tight yields due to the scarcity of opportunities and the long-term growth potential”.