A Hong Kong investor has snapped up a retail asset in Thomastown for $7.8 million, demonstrating the fierce competition for huge landholdings located in prime retail hubs.

The property comprises a massive showroom of 7,026sq m on a major 12,380sq m landholding and fully leased to an upmarket furniture retailer, Gainsville.

Savills Australia’s Clinton Baxter, Jesse Radisich and Benson Zhou negotiated the deal for 187 Settlement Road, on a tight yield of 6.7 percent, after only ten days of being released to market.

Mr Baxter said the rapid sale highlights the market strength for well-located and large format retail investments.

“Several investors pounced on this opportunity and made successive offers to purchase, with an investor from Hong Kong prevailing by paying the full asking price,” Mr Baxter said.

Gainsville pays a net rental of $524,233 per annum with 3.5 percent annual rental increases and Mr Baxter says the long standing tenancy combined with the exceptional location was the ultimate drawcard for the buyer.

“Investors were attracted to this asset by the long history of Gainsville at the property and its renewed 10-year lease, together with the burgeoning residential population in the northern growth corridor making Thomastown one of Melbourne’s strongest retail activity hubs,” he said.

“Previous investor concerns about the impact Amazon may have within the Australian retail landscape have certainly diminished, and we are experiencing renewed enthusiasm of investors within this sector of the market,” Mr Baxter said.

Mr Radisich continued to say that offshore capital has not disappeared from the market.

“Whilst Asian capital may have retreated from the residential market, Savills Melbourne is experiencing strong off-shore demand for well-located commercial investments across Melbourne, particularly those with significant landholdings,” he said.

Learn more about Savills Retail Investments.