Investors are continuing to pursue Melbourne retail properties securely leased to quality tenants, with a rare freehold opportunity in the prestigious inner-east selling for more than $5 million.
Fitzroys’s Chris Kombi, Chris James and Ben Liu sold the commanding hospitality building at 26-28 Cotham Road, Kew – formerly home to Hellenic Republic, operated by high-profile chef George Calombaris and his hospitality group Made Establishment – following an Expressions of Interest campaign that generated more than 70 enquiries.
The $5,006,666 sale price reflected a sharp 3.1% net yield. The immaculately-refurbished 635sqm two-storey building has a 6+6+6-year lease to chefs Ayhan Erkoc and Federico Perez Lopez for their Cotham Dining restaurant and Nazar Wine Bar, both operating under the one lease.
“The result is yet more evidence of the strong demand for quality investment-grade retail assets, despite the higher interest rate environment and a lot of negative market commentary,” Kombi said.
“Investors continue to put their faith in the resilience of bricks-and-mortar investments. Astute investors recognised the opportunity to acquire a well-presented, well-proportioned hospitality building in a central Kew Junction with a secure lease generating a strong rent return that will look all the more favourable as inflation continues to ease and interest rates normalise.
“Buyers are still there and willing to pay the price for high quality.”
The building is on a large 515sqm site with on-site parking and rear access, located within the Kew Junction Activity Centre.
Liu said the property presented as one of the best freehold investments with future upside opportunities in Melbourne’s inner east for 2023.
“The purchaser bought the property as an investment. They live in Kew and love the area, and can see its upside.
“We also received interest from land bankers looking to acquire a central Kew Junction property with excellent upside, located among leading local and national tenants with public transport at its doorstep and some of Melbourne’s most renowned schools, and assess their plans for the site while enjoying a strong income stream.”
The site is surrounded by Toscano’s, Leo’s Fine Food & Wine, Woolworths, Woodfrog Bakery, Commonwealth Bank and The Skinny Dog, while Xavier College, Methodist Ladies College, Trinity Grammar and others are nearby.
There is also excellent public transport at the doorstep, including the 109 tram and the 624 bus.
James said the inner east is seeing a number of medium and high-density developments being delivered, in response to ongoing demand from Melburnians to find a home in what is already one of the city’s most established and affluent areas, with excellent hospitality and lifestyle amenity, quality local and national traders and some of its best schools.