It is understood that Swisse vitamins investor Michael Saba paid $3.96 million for 365 Lygon Street, beating out 10 other bidders – three of them offshore – for the property, reflecting a 3.3 per cent yield.

The 214 square metre shop had been owned by pharmacist Frank Montegano, who died in September, aged 90 years. It had traded as Monte's Pharmacy for decades.

Mr Saba made his fortune investing in the Swisse vitamins business which was sold last year to Chinese company Biostime International for $1.67 billion.

More than 200 people attended the auction, handled by CBRE. An opening bid of $2.4 million started the auction and the property was on the market at $3.1 million, selling 27 per cent over over the reserve at just under $30,000 a square metre.

The yield was especially tight given shoe retailer Wittner, which pays $148,567 a year in rent, has only two years remaining on its lease.

CBRE agent Josh Rutman, who marketed the property with Rorey James and Sandro Peluso, declined to comment on the buyer, but said there was an unprecedented level of inquiry at the moment from local and offshore buyers.

"There's a record low supply of shops together and a lack of genuine investment alternatives in the low interest rate environment," Mr Rutman said.

"The current market cycle is a perfect storm for vendors who are considering selling out of their strip retail holdings," he said.

The next test of the northern CBD fringe market is 79 Gertrude Street, which goes to auction on Friday.