Gold Coast shopping centre sells at 50 per cent premium after two years

Benowa Gardens shopping centre on the Gold Coast has sold for $60.5 million - 50 per cent more than what former owner IJ Capital paid in early 2020.

Broker Savills says the deal is the latest in a strong run of retail transactions in Queensland, and is a major uplift in value for IJ Capital who initially paid $40.1 million for Benowa Gardens.

A local private investment group acquired the centre, which is anchored by Coles and hosts 37 specialty tenancies and a freestanding KFC drive-through restaurant.

The centre features a total gross floor area of 5,856sqm and parking for 384 cars, and is situated in the residential Gold Coast suburb of Benowa - four kilometres west of Surfers Paradise.

“IJ Capital’s focus is identifying market-beating returns for our investors, including significant capital growth,” IJ Capital’s Scott Lai said.

“We recognised value-add opportunities with Benowa Gardens, consistent with the “core-plus” investment objectives of the Fund.

“We immediately undertook an active management strategy including centre upgrade works and a focused leasing plan successfully addressing numerous vacancies.”

Savills selling agent Peter Tyson said Benowa Gardens attracted multiple offers following a brief period on the market.

“After stabilising the centre and significantly improving the income stream, the centre was briefly marketed in December 2021 and attracted multiple offers, resulting in a deal reflecting a capital uplift of over 50 per cent in under two years,” Tyson said.

“Convenience based neighbourhood centres as an asset class remain incredibly popular in the market, attracting a wide range of capital sources. Income streams underwritten by staple everyday needs, predominately food and services, have proven resilience and are less prone to fluctuation from outside influences. The pandemic effects, social distancing restrictions and work from home, have bolstered performance in the smaller malls.

“This underlying performance continues to drive an enormous weight of domestic and off-shore capital, both private and institutional, to target the asset class. Transactions on smaller malls tend to be dominated by the nimble private investor fraternity and is likely to remain the case as yields continue to compress in response to the weight of capital.”