Mount Waverley IGA with lucky 88-dollar bids sells for $600,000 above the reserve

Mount Waverley IGA with lucky 88-dollar bids sells for $600,000 above the reserve
Mount Waverley IGA with lucky 88-dollar bids sells for $600,000 above the reserve

A free-standing Ritchies IGA in Mount Waverley has sold to an Asian Melbourne-based buyer for nearly $700,000 above the reserve after attracting more than 23 enquiries from offshore Asian buyers prior to its June 27 auction.

Many of the bids included the number 88 – the Asian symbol of good fortune and good luck.

In a room packed with 200 people the 2,500-square-metre supermarket was the subject of a bidding war between four potential buyers in the room - three of whom were Asian - and a Hong Kong investor on the phone.

"Two bidders locked horns over the property" says Graeme Watson, joint selling agent alongside Raoul Holderhead from Burgess Rawson.

The supermarket had a $6.5 million reserve and eventually sold for $7.19 million.

The sale price reflected a yield of 6.51% based on rent of around $477,000 per annum plus GST, with the property leased to long-term tenant Ritchies IGA on a 15-year lease with renewal options to 2034.

It had previously been marketed in Asian publications given its location on the corner of Stephensons Road in Mount Waverley, a suburb where houses are regularly snapped up by Asian buyers looking to live in its sought-after school zone.

Recently Jeremy Desmier, Fletchers real estate director, said suburbs like Balwyn and Glen Waverley were popular among buyers with temporary residency because of their highly rated government schools.

Holderhead tells Property Observer the high yield reflected the fact the shopping centre is a “very rare” asset in the “dead centre of Melbourne” in a fairly affluent suburb with no available land pockets.

“The only competition is a Woolies round the corner,” he says.

Another appealing factor, he says, is the fact that it was only built in 1999 and thus is relatively new.

He says the buyer is willing to pay well above the reserve price despite “turnover being knocked around a bit from the recent supermarket price wars”.

He estimates that a Coles or Woolies in the same location could fetch $10 million or $11 million, with yields of around the 4% mark.

Graeme Watson describes Mount Waverley as a “very established, affluent area with a substantial Asian population".

"The IGA is located in a very comprehensive strip style centre” with none of the 100 shops on the strip vacant.

“All the major banks are on the strip plus there are four pharmacies and four bakeries,” Watson says.

He says the IGA's free-standing nature also made it an attractive asset for investors.

The sale of the IGA suggests Glen Waverley and surrounding south-eastern Melbourne suburbs are becoming something of a commercial as well as residential hotspot.

In March The Palms restaurant at 213-215 Blackburn Road in Mount Waverley, standing on a 1,015-square-metre block, sold for $2.03 million to a private investor on a yield of nearly 7%.

It sold with a 10-year lease to the restaurant, having attracted interest is in the vicinity of $1.9 million to $2 million.

Selling agents were Colliers International's Hamish Burgess and Ben Baines, who said three strong bidders pushed the price well above the reserve.

Burgess said at the time there was a strong demand for development sites in the Melbourne eastern metropolitan market, with developers now favouring medium-density sites in the eastern suburbs.

As an example of the demand for residential property in nearby Glen Waverley he pointed to the recent off-the-plan success of Consolidated Properties $70 million 11 storey Ikon apartment project.

All 116 one- and two-bedroom apartments in the mixed-use development were snapped when it launched last year. The project also includes an office and retail precinct. Construction began in April.

Recent Melbourne suburban shopping centre sales have included a Mentone supermarket anchored by Woolworths, which sold on a yield of close to 8%, and a Coles-anchored Bundoora Square in the north east, which sold on a yield of 7.4%.

Mount Waverley ranked as the 121st most liveable suburb in Melbourne in the 2012 Age liveability survey, with the report noting that neighbouring Clayton ranked 272 with the only sizeable difference between the two is Mount Waverley's good rating on crime.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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