Wollongong is now on the radar for outside “cashed-up investors” looking further afield for commercial property opportunities, an Illawarra agent says.
He also says Wollongong’s commercial property sector continues to thrive, with 7/63 Market Street recently selling prior to auction to an “established local investor” for $1.25 million.
This ground floor strata suite sits within a substantial commercial office building.
With a unit area of 248sqm, balcony of 13sqm and two basement car parks, the sale price reflected a rate per square metre of $5040 and showed a net yield of about 5.8 per cent.
The property is under lease until 2020 to Slater and Gordon Lawyers.
The sale was brokered by commercial agents Tim Jones and Travis Machan of MMJ Wollongong. Mr Jones said that the majority of interest came from Illawarra investors.
“As expected, we had very strong interest in this asset particularly from locals, but at the end of the day the result prior to auction was very strong and is another feather in the cap of the Wollongong commercial market,” Mr Jones said.
“I think the sort of yield it showed there at around 5.8 per cent, considering you haven’t got an extremely long lease, is very strong.
“That’s starting to get close to comparing to what they're attracting for that kind of product in Sydney.
“The vote of confidence by investors that they will look at a property in Wollongong at the same sort of price and yield that the same product may go for in Sydney, or in Sydney's outer suburbs (is encouraging).”
Mr Jones described the commercial property sector in Wollongong currently as “under-supplied, in demand and on the radar for Sydney and interstate buyers”.
“There’s a very strong influence from self-managed super funds who are looking to invest money, particularly in that zero to $2 million price range,” he said.
Mr Jones said there were a lot of “cashed-up investors” that were struggling to find stock and were therefore looking further afield from Sydney.
He said much of that flow-on effect was reaching Wollongong.
“Wollongong’s not considered to be too far away from Sydney now for Sydney investors," he said.
“So they’re coming down here.
“Plus we do have our own band of locally-based, cashed-up investors that will compete with the Sydney guys pretty strongly now.
“In days gone by, Wollongong wasn't really on the radar (for outside investors), and they'd sit and wait rather than buy in Wollongong.
“Whereas these days Wollongong definitely is on the radar for those buyers.”