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Boring and dependable is the new black for real estate investors

Boring and dependable is the new black for income-seeking real estate investors who forked out a total of $83.26 million at a super-size online auction on Tuesday, snapping up funeral homes, childcare centres, petrol stations and the Sunbury Ford dealership in Melbourne’s north.

Kingston Funerals home in Cheltenham sold to a Melbourne investor for $3.83 million.

Kingston Funerals home in Cheltenham sold to a Melbourne investor for $3.83 million.Credit:

The auction of 21 properties, conducted online with much of Sydney and Melbourne still in the grip of a pandemic lockdown, was fiercely contested. Another two auctions scheduled for Wednesday and Thursday in Brisbane and Sydney are expected to attract similar interest, agency Burgess Rawson said.

The auction extravaganza, when completed, will have put more than 60 properties under the hammer over three days.

Burgess Rawson’s Billy Holderhead said the Melbourne event registered 189 bidders across 21 properties for sale, providing a level of pent-up-demand among investors that pushed the total price of all assets 11 per cent above the vendors’ combined reserve of $75 million.

“Boring income streams are what everyone is chasing,” Mr Holderhead said. “There’s a lot of frustrated money sitting in banks returning under 0.5 per cent interest that is looking for a new home.”

That reliable income is being delivered by real estate leased to essential businesses like the Kingston Funerals home in Cheltenham, which sold to a Melbourne investor for $3.83 million on a yield of 3.78 per cent after buyers lobbed a vigorous 69 bids.

Another property leased to Coates Hire in South Australia’s Albert Park went for $16.1 million on a yield of 3.59 per cent. Two childcare centres in South Australia sold prior to the event.

There’s a lot of frustrated money sitting in banks returning under 0.5 per cent interest that is looking for a new home.

Burgess Rawson’s Billy Holderhead

Many of the properties were purchased sight unseen by interstate buyers, including the Sunbury Ford dealership which was snapped up by a keen Sydney investor for $9.61 million. That same investor purchased two commercial properties in Tasmania in a separate deal in May for a combined $4.62 million.

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