09 May 2023
Investors have banked on the positives of a Bellarine Peninsula retail property leased on relatively short terms to one of Australia’s big four banks.
The Commonwealth Bank signed a new two-year lease this year on its Ocean Grove branch of more than 20 years at 76b The Terrace property, with several one-year options.
It’s not exactly a long-term commitment in an industry where face-to-face customer service is becoming a thing of the past as phone and internet banking takes over.
But five investors, including two from Melbourne, saw the positives in the property, which sold for $2.16m at auction, achieving a 3.9 per cent yield.
Darcy Jarman agent Andrew Prowse said the true value of the underlying real estate shone through for the bidders.
“Being a prime position on The Terrace opposite Coles, they were confident of strong capital growth in the short to medium term,” Mr Prowse said.
“We were surprised how well it went. It was only a two-year lease with options to Commonwealth Bank.
“It wasn’t a terrific lease by any stretch of the imagination, but they all saw past it and were happy to pay the tight yield just for great real estate.”
“People were still happy to pay for a 4 per cent return on a property that could potentially be locked up for five years before you could generate any true growth in the rent.”
Mr Prowse said it was one of the strongest yields seen in some time in the region, and might not be replicated until into the new financial year once interest rates settle down.
“All those Bellarine Peninsula retail strips normally perform very well, such as Ocean Grove and Barwon Heads,” he said.
Commercial tenancies on the peninsula were hot properties from a leasing and sales perspective, he said.
“They very rarely come up, through Ocean Grove, Barwon Heads to Portarlington, they’re always sought after, people are keen to grab the commercial real estate in those pockets because there is so few available.”