Swanson Street, Melbourne retail site breaks Victorian commercial property record

A two-storey retail asset on Swanston Street in Melbourne's CBD has set a new record building rate for a commercial property in Victoria, after selling for $9.2 million at auction.

It is the first building to come onto the market in the retail strip in five years.

273 Swanston Street sold on a yield of 2.13%, with more than 200 people attending the auction.

The sale of the 130 sqm building, leased to dumpling bar New Taipei, represented a new record rate of $70,769/sqm for the Melbourne CBD.

CBRE's Melbourne City Sales team of Alex Brierley, Julian White, Nathan Mufale and Chao Zhang managed the sale on behalf of the private family who owned the building for the past 70 years.

Eight local and international bidders fought to secure the asset, with a Malaysian investor outbidding several Melbourne families and rival parties from Hong Kong and Malaysia.

The building is next door to a McDonald's on the corner of Lonsdale Street and Swanston Street.

"As the first Melbourne CBD freehold auction in 2020, this was the first real test of the market and what we have witnessed is a continuation of the confidence buyers demonstrated in late-2019," Mr White said.

"Coupled with other recent Melbourne CBD sales, it also demonstrates the significant power of the auction as a method of sale for properties that are suited to public competition."

The result follows the sales of the Tsindos Greek Restaurant at 197 Lonsdale Street to a Taiwanese investor for $8.1m on a similarly tight yield of 1.29%, and the OPSM building at 384 Bourke Street for $22.5m on a 2.60% yield in December 2019.

"We are noticing many Asian buyers are recognising the rarity of these freehold assets within the CBD grid," Mr Zhang added.