A converted retail building occupied by retailer Country Road has sold on the Mornington Peninsula for $7.125 million – which was about $1 million over reserve – on a yield of 3.6 per cent.
The Sorrento sale represents a windfall for the owner, former Rothschild Australia chairman Peter Griffin who was also president of the Victorian Cancer Council.
He purchased the Post and Telegraph building just over four years ago for $2.53 million and spent around $1 million converting it into a retail premises.
Built in 1905, the store is located at 10-16 Ocean Beach Road and is leased long term to Country Road until 2022.
The campaign was conducted by CBRE with bidding commencing at $4.5 million before the sale was finalised to a Melbourne family. On listing, CBRE had expected a figure of above $5 million.
Related reading: Hong Kong Investor Buys Byron Bay Retail Asset
The strong sales result reflects other sales in the Sorrento area in recent years.
In 2016, a 2,600sq m store at 80-98 Ocean Road, sold for $11.47 million a passing yield of only 0.4 per cent. The building, occupied by Mitre 10 and O’Brien’s Removal and Storage until 2020, had sale expectations of just $5.5 million.
Last October, a Mornington Peninsula group of cinemas owned by the Kirby family, founders of Village Roadshow, sold for nearly $10 million. The cinemas included the Sorrento cinema on Ocean Beach Road and a newer multi-screen complex at Rosebud. The properties were sold with long-term leasebacks.
In November, Sorrento’s historic Continental Hotel was put on the market by its owner, publican Julian Gerner with offers expected around the $20 million mark. He had obtained a contentious redevelopment permit which included a four-storey apartment, "wellness centre" and cafe, lap pool, 24 new hotel rooms, modern public bar and restaurant.
Related reading: Sydney's George Street to Rival Pitt Street After Refurb
Yields for retail assets have been tightening also in Melbourne with the recent sale of a historic two-storey corner block in Melbourne’s Lonsdale Street Greek precinct selling for $10.15 million on a tight yield of just 3.94 per cent.
Strip shops on Melbourne retail strips including at Hawksburn Village on Malvern Road have been selling for under two per cent yield as investors shy away from the unpredictable share market and turn to bricks and mortar, betting on future capital gains and rents.