Would you pay $2m for a fish and chip shop?

A fish and chip shop in Mount Maunganui, Tauranga, has smashed real estate records.

The retail property at 80 Maunganui Road occupied by the popular Mount Fish and Chips sold for $2 million at auction, at a record low yield of 1.425 per cent.

There were 70 bids from five parties for the shop, highlighting the ongoing strength of Tauranga’s commercial property market.

Simon Clark, Managing Director of Colliers Tauranga, which sold the property, says the yield is the lowest on record for a commercial property in Tauranga.

“This is an unprecedented result, even for a market where low yields have become the norm. However, we believe there’s still room for yields to compress even further," Clark says.

“Strong competition for prime commercial properties is pushing up sale prices and putting pressure on rental yields, even as rents continue to rise.

“This competition is being driven by both local and national investors."

Clark points to the latest Colliers International survey, which shows Tauranga/Mount Maunganui is the top spot in the country for commercial property investor confidence.

80 Maunganui Road is a 80sq m building on a 94sq m freehold site with commercial zoning.

The property was marketed by Colliers International Tauranga Brokers Duncan Woodhouse and Richard Davidson.

Woodhouse says it was sold to a local investor. “The buyer could take advantage of the site’s potential with a multi-level development, or land bank for a future cycle while enjoying holding income from a month by month lease.

“There is also an opportunity to refurbish the property to make the most of demand for retail space on The Mount’s thriving and popular retail strip, which is home to a vast array of eateries as well as local, national and international retailers.”

Clark says that if refurbished, the building could show returns of approximately 2.5 per cent to 3.5 per cent, depending on the final costs and rental achieved

“It is an exceeding low initial return but even with it redeveloped, it is a record low return and shows the strength in this very unique location and low price range.”

Clark says he expects more strong sales results in 2020.

“We’ve had a huge year so far, and there’s no sign of the Tauranga/Mount Maunganui market slowing down in the next 12 months.”