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The Marine Hotel, located in the bayside suburb of Brighton, sold to a mainland Chinese investor and boasts 20 years of additional options remaining on the current lease term.
The property generates an annual net income of approximately $550,000 per annum, representing a benchmark yield of 3.30 per cent.
Within the last year and a half, Chinese investors have acquired $380 million worth of Victoria's income-producing real estate market.
CBRE's Mark Wizel who negotiated the sale in conjunction with Vinci Carbone says the property attracted strong interest.
"The Marine Hotel's prominent corner position in the heart of Brighton attracted a significant amount of interest both locally and offshore," says Wizel.
The successful purchaser outbid several Victorian based high net worth families and prominent Australian property players in the area.
"We were delighted to see such wide-ranging interest in the investment, which translated into a number of offers and a shortlist of four parties," says Wizel.
CBRE's Lewis Tong says the sale also represents high levels of confidence in Melbourne's south-east retail assets.
"The sale of the Marine Hotel is a very strong statement for the overall confidence that buyers have for investment assets in Melbourne's south east, especially given their growing understanding of affluent catchments in Melbourne," says Tong.
"The sale of Marine Hotel in Brighton highlights how a lack of available blue chip investment properties, combined with historic low interest rates, is helping support the continual yield compression especially in the retail sector."
The acquisition of the Marine Hotel follows the sale of Albert Park's Beach Hotel for $18 million in April, demonstrating continued Chinese interest bayside property.
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