A private syndicate has spent an estimated $18 million to acquire a retail asset in Elermore Vale which has not changed hands in almost seven years.
The Bamm Group, who acquired the Elermore Shopping Centre in 2011 for $8.3 million, sold the asset on a 6.8 per cent passing net yield.
Located at 133-137 Croudace Road, just nine kilometres west of Newcastle, Elermore Shopping Centre comprises a Ritchies SUPA IGA supermarket supported by 17 non-discretionary specialty tenants, with 4,048 square metres of gross lettable area on a 23,882 square metre site including additional land ready for development, car parking for 235 vehicles and an estimated fully leased net income of $1.44 million.
Savills Australia’s Steven Lerche who sold the centre on behalf of the Bamm Group, said Newcastle was seeing a surge in investment activity, largely stimulated by the $6.55 billion state government investment mandate.
He said the mandate has brought to light the new light rail system on Hunter Street, the new transport interchange at Wickham, construction of the Newcastle City University Campus and much more.
“We are seeing a lot of investor interest come from the Sydney investment market and interstate markets such as Melbourne and Brisbane due to the significant growth prospects of Newcastle,” Lerche said.
Retail assets have been in particular favour with developers due to their strategic locations, large site area, existing income stream and potential to re-develop under the existing planning controls.
Newcastle is the largest regional economy in Australia and is the second most populated area in NSW.
Elermore Vale is a popular and established residential suburb surrounded by schools, childcare centres and community facilities, with a key primary population of 5,759 residents and an estimated population of 20,459 within the main trade area.
“The median house price in Newcastle is $595,000 compared to approximately $1.17 million in Sydney – according to Domain Group’s rental and house price report – and investors are taking notice,” Savills Australia Andrew Palmer said.
“Elermore Vale and its surrounding suburbs are certainly set to reap the benefits of this surge in investor demand” he said.