essential services outweigh interest rates for wealthy investors

Petrol stations have caught the eye of shoppers, with $6.1million paid for a 7-Eleven and a car wash in Orange, in central west New South Wales, with a yield of 5.6%.

Burgess Rawson partner Yosh Mendis said 11 of the 12 properties sold at a 92% clearance rate and the average price paid was 11% above reserve.

“Higher interest rates had no impact,” Mr. Mendis said.

“We had as many bidders at our auction today as we have in the past and there was no impact on the prices. These prices are the same as what we have achieved in our previous auctions.

“It’s a testament to the market, which is the strongest it’s ever been for long-term leased investment properties.”

Mr Mendis said regional yields, which tend to be significantly higher and properties therefore more affordable, have compressed sharply over the past 12 to 24 months as demand for service asset classes essentials has increased.

“It has to do with the asset class, in particular, and the rental structure – I wouldn’t say it’s all down to the lower price,” Mendis said.

He added that all of the buyers at the auction were wealthy private investors looking for secure cash flow.

“Many of the investors we deal with currently consider commercial real estate to be their preferred investment vehicle,” he said.

“Most people buying commercial property right now see it as the most stable investment vehicle, where they know exactly what their rent will be from day one.”