Pub in Melbourne's inner suburb fetches $3.18 million, well above reserve

A mid-19th century pub in Melbourne’s inner-city suburb of Abbotsford has changed hands for $3.18 million, well above the reserve price of $2.25 million.

The sale highlights the strong market for pub transactions. 

The Park Hotel at 191 Nicholson Street was advertised for sale via auction on September 1 through Knight Frank.

It sold on a 2.6 per cent yield.

The property currently returns $83,340 p.a.net. and rent increases are 4 percent annually.

The current lease term of three years ends in 2018 with a further term of 3 years.

It has a front bar, dining room, commercial kitchen, beer garden and upstairs accommodation.

The site area is about 480 sqm.

It was sold by two brothers who had owned the venue as an investment for 35 years.

Selling agents Andrew Greenway and Paul Pellegrino of Knight Frank said the buyer had no intention of redeveloping the building into apartments, a now-common trend with Melbourne's popular pubs, Fairfax Media reported.