Bulky goods transactions set to reach decade high

Australian bulky goods property transactions are set to reach a decade high, with sales in the last two calendar years totalling nearly $1.6 billion.

Savills research showed that more than $800 million in assets changed hands last year from 23 properties and a further 27 sales were recorded in 2012, totalling $790 million. Both figures were well above the ten year annual average of $546 million for an average 24 properties sold.

"Investors are looking at up to 10 per cent for large bulky goods centres with short and medium term lease expiries, but they are also looking at smaller, well located, properties that may deliver well below that, perhaps around 7.5%", said Savills Australia’s national head of research, Tony Crabb.

"So in short there is interest across the board at the moment for bulky goods properties and the reason for that is that, generally speaking, investors are getting very good value for their money ."

A key driver for the bulky goods sector is considered to be dwelling commencements.

New dwelling commencements have been trending up over the last two years - coming in at 165,000 in 2013.

"It's not inconceivable to expect a peak of 170,000 to 180,000 during 2014 ", said Crabb.

"The RBA has put average dwelling commencements at 155,550 a year over the last 20 years and so we are looking at a very positive trend that will undoubtedly flow through to the bulky goods sector as householders begin to furnish those dwellings."

A keen buyer of bulky goods property has been BB Retail Capital (BBRC), headed by Bras N Things founder and Melbourne retail king Brett Blundy. Mr Blundy is said to own 12 bulky goods centres nationally.

Savills Victorian industrial executive of bulky goods, Keith Kooloos, said "let’s make no mistake-Brett Blundy likes 10 % yields, and who wouldn’t want that sort of cash flow and capital growth, but it’s also his ability to add value that sets him apart."

Mr Kooloos said he expected investors to continue to be attracted to bulky goods purchases based on current market fundamentals especially in key growth corridors where an established population would see significant new residential growth.

"It’s areas such as Melbourne’s south-east, northern and western growth corridors that can immediately sustain a bulky goods centre while the area undergoes substantial population growth, that we are going to see the most interest," he added.