Coles sets $27.4m record with Toowoomba supermarket sale

Coles’ development arm has achieved a new record in Queensland with the sale of its Toowoomba supermarket and liquor outlet for $27.4m. This sale to a Victorian private investor sets a fresh benchmark in price for non-metro supermarket sales in the state, and provides further evidence that small malls and retail properties are retaining their value in a choppy retail sector.

Coles Sippy Downs sold for $24m five years ago, Woolworths in Mount Isa sold for $16.91m two years ago, and Coles Yarrabilba changed hands for $19.05m in 2019. There were over 200 inquiries from domestic and international buyers for the retail asset, highlighting strong buyer depth for Queensland supermarket investments.

The Toowoomba deal reflects a dynamic playing out in the retail property sector, where smaller assets with non-discretionary shopping experiences are holding their value, while the valuations of larger subregional and regional shopping centres have come under pressure amid uncertain economic conditions and rising interest rates.

Investment yields for retail assets have diverged sharply since touching a cyclical low of 4.92% in Q2 2022, with yields for destination centres jumping to 7.3% by December, while yields for everyday needs centres have tightened to 4.5%.

Separately, in Melbourne, HomeCo Daily Needs REIT has sold Epping Hub, a large format retail centre in Melbourne’s north, along with an adjoining land parcel for a combined value of $70.25m.

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