Record prices for ‘pandemic-proof’ supermarkets as sector soars

The crisis has only encouraged investors to dig deeper to buy into the surging asset class.

Coles Woodend, some 70km from Melbourne, sold for a record $33.3m.

Shopping centres in regional areas are trading at a rapid clip, unaffected by the pandemic and showing clear signs of hefty increases in values.

Private investors are dominating the market, as they chase both the steady income on offer and the long leases to supermarket giants.

The smaller centres have also avoided the problems that had dogged larger shopping complexes, particularly in city areas, during the crisis.

A series of sales sparked expectations of even further price rises with the most recent deals done in the Victorian towns of Swan Hill and Kyabram.

The Coles Swan Hill Shopping Centre was scooped up by a private group for about $20.075m on a yield of 5.08 per cent.

Located in the heart of the Murray River, 338km north of Melbourne’s CBD, the 3452sq m centre was sold via Stonebridge Property Group’s Justin Dowers, Kevin Tong and Philip Gartland.

The property occupied an 8230sq m town centre site and comprised of a Coles supermarket, Liquorland and four speciality shops.

An aerial view of Coles Woodend.

“The attraction for regional supermarkets and shopping centres is continuing to grow, especially those on traditional net leases and witnessing rental growth with the supermarket being in percentage rent,” Mr Dowers said.

Mr Tong said the asset drew interest from international Asian investors and they were chasing assets in key regional hubs.

The firm has also handled the sale of Woolworths Kyabram which was picked up by a private investor for $23.8m on a yield of 4.84 per cent.

The property comprises of a Woolworths supermarket and BWS on a 7195sq m site.

The sale was only the second Victorian freestanding supermarket in 2021, highlighting the lack of supply.

The sales come on the back of a regional Victorian Coles and as investors chase “pandemic-proof” supermarkets. Private investor DeGroup snapped up Coles Woodend for $33.3m at a record price for a regional Victorian freestanding supermarket investment.