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Premium investments forecast as hot property in 2020

Premium investments forecast as hot property in 2020

by Grace Ormsby | February 12, 2020 | 1 minute read

Early interest and activity from investors seeking “premium” investment opportunities in 2020 is a sign that such assets will only increase in popularity in the months to come, a real estate business has flagged.

Melbourne
Melbourne
by Grace Ormsby
February 12, 2020

Colliers International Melbourne metro sales director Ted Dwyer and associate director Ben Baines have indicated that despite a marked decrease in activity around “trophy” assets in 2019, premium investments were still considered a lucrative investment.

“In fact, appetite for these assets saw Victoria receive a 70 per cent clearance rate, and we expect these results to surpass this in 2020,” Mr Dwyer and Mr Baines noted.

The Colliers International metro sales team reported 119 premium investment transactions in Victoria for 2019 – a total of almost $365 million worth of sales.

The agents noted that activity was most prominent in the metro region, where investors competed for service stations, banks and fast-food assets.

The average yield for premium metro assets last year was 5.27 per cent, while regional assets achieved an average yield of 6.4 per cent.

And while last year’s tightening of the market “was a result of political uncertainty and the financial services royal commission”, Mr Dwyer and Mr Baines have commented that with both of these events now long gone, investment is back on track.

“Investors have re-emerged with aggressive mandates for commercial investments with long-term leases.”

It’s led to the agents forecasting increased activity for 2020 from both buyers and sellers, with low interest rates and easier access to funds also playing a part.

“Assets such as childcare facilities, banks, fast-food retailers, supermarkets and service stations are expected to be in high demand,” they commented.

Premium investments forecast as hot property in 2020
Melbourne
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