- Croydon centre sells on sharp 4.6% yield -
Melbourne, May 4, 2018 – A Melbourne based Asian investor has paid $18.8 million on a sharp 4.6 per cent yield for the Maroondah Village Shopping Centre at Croydon in Melbourne’s northeast in a deal brokered by CBRE.
The single level neighborhood centre is anchored by a strongly trading Coles Supermarket and complemented by 10 specialty retailers, spanning a site area of 9707 square metres which includes 2000 square metres of surplus land and 113 at grade car parks. The centre is 98 per cent leased with an annual net income of $850,000.
According to CBRE National Director Mark Wizel, who brokered the deal with Director Retail Investments Justin Dowers, and Kevin Tong, the property attracted a strong field of local and international investors.
“The centre offered exceptional investment credentials including a strong lease covenant anchored by Coles and enormous potential to add significant value through further development of the site.
“It is also well placed to benefit from population growth and tourism driven by its close proximity to the increasingly popular Yarra Valley,’’ Mr Wizel said.
He said there was no surprise the centre had sold to an Asian investor given the rapid growth in the local Asian community, which now exceeds 20 per cent of the region’s total population, and the fact that the Civic Square Shopping Centre, also in Croydon, also sold to an Asian investor for $30.15 million.
Mr Wizel said the growth in the Asian community had seen the median house price rise to more than $1 million delivering a retail catchment with an increasing level of disposable income.
Mr Dowers said the zoning, which allows for more intensive mixed use development, would provide the purchaser with the flexibility to meet the changing demand, driven by population growth and tourism, for services and add significantly to the value of the asset.
“Long term assets like Maroondah Village therefore have the ability to offer much more than what we see today. They generally sit on the most substantial and strategically placed land holdings within any catchment area, with the potential to become a centralised point for the distribution of goods and services,’’ Mr Dowers said.
He said the current owners had purchased the centre and, later, neighbouring sites to allow for future expansion of the Coles Supermarket or for a redevelopment of the entire property.
“The opportunity for value-add investors to acquire a well-leased centre like this one at a price point of under $20 million was a key factor that contributed to the strong market response,’’ Mr Dowers said.
He said centres like Maroondah Village, given its predominately non-discretionary based lease profile, also represented a recession-proof investment and the best hedge against inflation.
“Well located convenience centres with a tenancy weighted towards nondiscretionary spending have a propensity to perform well during any economic cycle.
“When you have a pipeline of strong population growth in a catchment area over a 10 to 20 year period, assets like Maroondah Village become an even more attractive proposition for the risk averse investor,’’ Mr Dowers said.