Investors are turning to defensive, safe haven assets in order to insulate them from the ongoing impacts of the COVID-19 pandemic.
Currently investors are seeking opportunities where they are confident, they will have certainty of income both now, and beyond the impacts of the pandemic, and are being more diligent than ever in assessing a tenant’s financial position and viability.
Demonstrating this recent trend is the off-market, off-the-plan sale of a strata titled VicRoads customer service centre to a China based investor for $9,300,000. The VicRoads centre, at 93A Heatherdale Road, Ringwood is now under construction, and will provide an initial lease term of 12 years and a commencing net rental of $469,580 per annum. The asset forms part of the ‘Base Ringwood’ development, which also comprises offices and store warehouses, presently being marketed.
The sale price of $9,300,000 represents a very sharp yield of 5%.
Savills Australia agents Jesse Radisich and Benson Zhou negotiated the off-market sale on behalf of active local developer Sector Property Group, who is delivering the mixed-use project, positioned within an evolving industrial precinct in Ringwood. Sector Property Group is currently delivering many high quality mixed-use projects throughout Melbourne.
Mr Radisich said there was immediate, strong buyer interest in the opportunity, with multiple offers received and contracts exchanged within 3 days of Savills appointment. “Buyers were immediately drawn to the security and certainty that the Government lease covenant offered, and they were willing to act extremely quickly and accept a very tight yield in order to secure the property,” he said. “The demand demonstrated for this opportunity is a reflection of the rarity of investment opportunities offered to the market with Government lease covenants, and the fact that yield essentially becomes secondary to security of tenure and income in the current market,” he added.
According to Benson Zhou, buyer demand from off-shore investors remains strong, and Australia continues to be seen as a safe-haven investment location with strong fundamentals and growth prospects into the future. Mr Zhou said that the property attracted overwhelming interest from international buyers. “We were able to quickly tap into our global network as well as deep ties with the local intermediaries and secured a number of offers within a matter of days,” said Mr Zhou. Benson added “Our many years of activity within the Asian communities has provided a strong reputation and level of trust within our network and with buyers.”
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