Werribee bank trades at record yield

The National Australia Bank freehold at Werribee sold for over $7 million.

A bank investment with development upside in Werribee’s central commercial precinct has sold for $7.01 million reflecting a 3.75 per cent yield – a region-record for an asset of this type.

Over 40 bids were received at the auction for 22 Watton Street, with four underbidders contesting over the reserve.

Demand was despite the Reserve Bank of Australia’s surprise decision to up interest rates on the day.

Completed in 2016, 24 Watton Street is tenanted to ANZ, which moved from next door, and Gordon TAFE.

“The market continues to be driven by significant amounts of uninvested equity rather than concerns about borrowing costs whilst interest rates remain at historically low levels,” Emmetts’ Charles Emmett, who marketed the property with Andrew Milligan and Geoff Emmett, said.

“If anything, inflation is more a motivator to invest cash equity,” he added.

“To many investors, the decision is whether you put your money in the bank on a term deposit at 0.5pc or buy the freehold at 3.75pc,” according to the executive.

Hub of activity

On 632 square metres, with rear laneway access, 22 Watton St sits within an Activity Centre zone, where intense development is encouraged.

The local council has skin in the game, in 2016 outbidding developers for a prime holding on the street – the former Peter Davey Toyota car dealership – also with frontage to the Princes Highway (story continues below) – which it presently uses for parking.

Also in the area – on Synnot St – Citinova and Pelligra recently completed the 12 storey mixed use Hunter Building, with a guesthouse operated by Holiday Inn, and c3000 sqm of offices.

National Australia Bank is tenanted to 22 Watton St until 2026 – over two floors, it contains 710 sqm of retail and office area, and 10 car parks.

It neighbours a three level mixed use investment constructed speculatively six years ago, and immediately filled by ANZ and Gordon TAFE.

“The strip benefits from a lack of competition…which has led to minimal vacancy,” Mr Emmett said.

“[It] is also at the centre of a very strong economic area that has created significant intergenerational private wealth over the past 50 years,” according to the executive.

The catchment, in a growth corridor, is set to grow over 60pc by 2040, he added.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.