After a record number of transactions and a significant jump in value in the past 12 months, Windsor and Prahran have been cemented as two of the most sought after suburbs in Melbourne.
Seventeen deals were struck in the past 12 months for a total of $78.356 million, up from 13 deals in 2015 for a total of $59.124 million.
Colliers International’s Ben Baines, Jeremy Gruzewski and Ted Dwyer facilitated the majority of deals in the area, with a 54 per cent market share totaling $42.665million for 2016.
“A mere five years ago, Chapel Street, South Yarra, was considered the far superior premium retail strip, while Chapel Street, Windsor, was full of second-hand traders and low-end retail," Mr Baines said.
“The significant redevelopment of residential apartments has seen its relatively quick transformation to one of Melbourne’s hottest locations.
“With the continual rejuvenation of the southern end of Chapel Street, a multitude of local and offshore developers have been keen to get a foothold in the Prahran and Windsor area,” he said.
The area’s most notable retail transaction was for 125-131 Chapel Street, Windsor, last October, which sold to a local investor on a 3.5 per cent yield at $14.96 million.
Mr Baines said an approximate 16-19 per cent increase in land rates in the area throughout 2016, and the relative decline in yield by 75 basis points, were a clear indicator of the significant demand.
“A 30 per cent, 12-month growth in median house prices has resulted in an opportunity for developers to deliver more affordable housing, particularly apartments, that still has immediate access to some of Melbourne’s best amenity,” he said.
“Owner-occupiers are also extremely active in the Windsor/Prahran area, as many of the existing older-style buildings and office blocks are being redeveloped into residential apartments. These buyers want central locations with easy access to public transport and staff amenity.”
A prime example of an owner-occupier out-muscling developers was the sale of 86-90 High Street, Windsor, which sold at auction in November for $3.93million – $10,679 per sqm on land and 31 per cent above the vendor’s reserve price. The purchaser outbid four developers for the property.
Colliers International Retail Leasing Manager Cam Taranto said national and international brands were speculated to be circling on retail shops in the area, which would ensure growth beyond 2017.
"Chapel Street still remains the number-one outdoor shopping and food precinct in Melbourne, which has been driven by substantial residential growth and overseas retail interest,” he said.
“With rents for 100 square metre shops in Windsor and Prahran substantially less than those in South Yarra, the opportunity for retailers to lock in rents now has never been better. We are seeing inflated interest from qualified retailers making the most of this adjustment.”
Rents for 100 square metre shops in Chapel Street, Windsor, sit between $750 and $950 and rents for 100 square metre shops in Chapel Street, Prahran, sit between $650 and $850, while rents for comparable spaces along Chapel Street, South Yarra, sit between $1150 and $1350.