Savills Melbourne Chinatown retail auction affirms sub 4% yields

A crowd of more than 150 people were drawn to Melbourne CBD’s when local and offshore bidders competed for a Chinatown retail property.

With a $4 million opening bid, it was sold to a local investor for $5.01 million on a tight 3.87% yield through Clinton Baxter and Nick Peden of Savills.

The 30 minute auction saw 95 registered bids after more than 220 pre-auction enquiries. 

The 166 Russell Street property sold well in excess of price expectations. The vendors, Lai Meng Wong, Mui Chun Cheew and Kok Leong Lee, through Australiawide Melbourne Pty Ltd paid $1,927,000 in mid-2008. It sold at $237,500 in 1986.

Located on a 136 square metre site, the four level, 295 square metre, retail building was sold with a five year lease to long standing tenant, Cats Hair and Beauty, at a net annual rental of $194,182. 

Clint Baxter said the tight yield set a new benchmark for CBD retail properties.

Investors were now fully prepared to accept below 4% yields for prime retail assets, he said.