NAB branch auction brings the crowds to Chapel Street and sells under the hammer for $12.825 million

Anyone driving down the Chapel Street retail strip last week could have been forgiven for wondering if there was a run on the bank when a large crowd gathered outside the NAB branch.

In fact they'd gathered to attend an auction of the bank's premises.

Fitzroys agent Charles Emmett who alongside colleague David Bourke marketed the two-storey premise at 600 Chapel Street estimates a crowed of around 200 people gathered to watch the property sell under the hammer to a private Melbourne investor for $12.825 million.

“A lot of people were behind the photographer,” he tells Property Observer.

“It was a very big crowd.”

There were close to 160 enquiries registered over the course of the auction campaign and six under-bidders on the day.

Emmett says the price achieved, representing a yield of 4.6%, was above expectations with the building bringing in total income of $591,686 per annum.

The premises have been occupied by NAB since 1951 and last sold for $3.59 million in 1997.

The sale price equates to a compound annual growth rate of around 8%.

The bank occupies the ground floor of the property on five-plus-five year lease currently returning $506,115 per annum plus GST.

The first floor comprises commercial offices and is leased to Jagen Pty Ltd on a four-year deal beginning February 2010, and returning $85,571 per annum plus GST.

Emmett says he has sold quite a few retail premises on prominent retail strips since the start of the year including in the CBD, in Armadale, Camberwell and Prahan.

“There has been a surge in demand for retail investment property,” he says.

“Demand for retail property within close proximity to South Yarra’s high density ‘Forrest Hill’ precinct is at an all-time high as investors seek to leverage their returns off the strong local population growth fuelled by the dozens of new apartment towers in the area,” he adds.

In September last year, a refurbished two-storey retail strip property in Sydney’s Hurstville leased to NAB sold for $9.01 million at auction on  yield of 5.85%.

Also in September last year, a historic Parramatta bank, tenanted by Westpac, sold for $7.1 million to a Hong Kong-based investor.

A more recent bank branch sale was the premises of an ANZ bank branch in the Victorian heritage country town of Korumburra in South East Gippsland has sold at auction today for $462,000.

It had pre-auction hopes of around $325,000 with bids starting $300,000.

There were around six bidders and the property sold on a yield of around 5.2%.