The retail sector is experiencing a surge in investor activity which continues to track at strong levels, with the weight of capital in the market fuelling record demand and driving record low yields.

In the latest major transaction in Queensland, Savills has negotiated the sale of the new Kmart store in the northern Gold Coast suburb of Oxenford, to a Melbourne-based private investor for just under $22.7million, representing a record low yield of 5.95 per cent.

The sub six per cent yield eclipses the recently set record of 6.04 per cent achieved in the sale of the Masters Home Improvement store in Melbourne’s Williams Landing.

Savills national director, Peter Tyson, said the strong sale result followed overwhelming investor interest in the asset, which saw more than 160 separate buyer enquiries throughout the short campaign.

“The campaign resulted in numerous unconditional bids, reflecting both the quality and simplicity of the asset on offer as well as the number of new entrants in the market adding to the overall weight of capital seeking investment in the retail sector.”

“Freestanding single tenant retail investments with long leases are favoured by many passive investors due to the low leasing risk, ease of management and simplicity”, Tyson added.

The sub six per cent yield result is understood to represent the lowest yield in Queensland for a freestanding retail asset in this higher price range, and one of the lowest results recorded nationally for a discount department store asset.

The property comprised a new 6200sqm freestanding retail building wholly leased to Kmart Australia on a 12 year term with four six year options.

The property features on grade parking for 184 vehicles and a site area of 13,550sqm.

Tyson also commented that “the property was well positioned in a “high energy” retail precinct adjacent to a major interchange on the busy M1 Motorway in the north Gold Coast growth corridor, surrounded by other national traders including Bunnings, Aldi, and Woolworths”.