Retail property sales remain above long term average: Savills

Retail property sales remain above long term average: Savills
Retail property sales remain above long term average: Savills

Investors continue their love affair with Australia’s retail property with sales of more than $8.4 billion nationally in the year to September, $1.3 billion over the five year average, as yields continue to tighten, according to Savills Australia’s latest research.

The buyer profile varies across the states however trusts and foreign buyers again figured prominently with each accounting for 30 percent of total purchases nationally while private investors also took a large chunk with 20 percent of purchases. 

According to Savills National Head of Research, Tony Crabb, Brisbane lead the capital city markets with sales of $2.39 billion just ahead of Sydney ($2.3 billion) and Melbourne ($2.1 billion) while Perth recorded sales of $989 million and Adelaide $649 million. While some totals were down on the previous corresponding period all were up on the five year average.

Yields for enclosed centres continued to firm with Regional centres in the most populous states of New South Wales and Victoria as low as 4.75 per cent, while Neighbourhood centres were as low as 7 percent in Melbourne and up to 8.5 per cent in Perth.

Shop yields were again lowest in Melbourne with 3.5 percent and Sydney (4 percent) for CBD malls and up to 9 per cent for strips in Perth while bulky goods sales again reflected the strong housing market with $1.13 billion in sales up 31.5 percent on the five year average of $857 million.

"Retail property continues to attract significant investment dollars and while foreign investment has again been very strong, local buyers, institutional and private, have also figured prominently in snapping up any opportunities that are put to the market,’’ Mr Crabb said.

The figures include a number of major September quarter transactions including:

  • Adelaide – Hilton Plaza - $19.2 million - Fort Street Capital.
  • Brisbane - Annandale Central Shopping Centre - $33.5 million - SCA Property Group
  • Melbourne – Bentons Square - $38.25 million (50 percent share) – Vicinity Centres
  • Perth - Subiaco Square Shopping Centre - $38.35 million - private investor
  • Sydney - Campbelltown Mall - $197 million -  Charter Hall

By far the largest transaction in the quarter was South African retail giant Woolworths Holdings Ltd’s sale of the David Jones Sydney store (pictured above) for $360 million to Scentre Group and Cbus Property.

In Sydney, Savills’ National Director Retail Investments, Steven Lerche, said the availability of  retail assets for sale continued to diminish and while the amount of money chasing retail remained huge, yields would continue to tighten.

"Yield compression can only go so far, eventually it is going to taper off. The question is when do yields become so tight that private investors are tempted to sell? We may see some evidence of that soon as privates capitalise on the tight market and look at selling.

Timing is important here because it is only going to be when they see that the market is on the cusp of turning, and they are going to realise absolute full value for their assets, that they will feel comfortable making that move,’’ Mr Lerche said.

In Melbourne Savills Associate Director Retail Investments, Pat De Maria, agreed that both the number of properties on the market and yields were falling in unison leading investors chasing yield to a broader retail offering.

He said there was evidence that the bigger players were increasingly being forced to look at the smaller end of the market for opportunities.

"Six per cent is now seen as a reasonable return and, what you might call alternative sectors of the market such as petrol stations, are attracting increasingly greater scrutiny,’’ Mr De Maria said.

He said what had been a frenetic retail market looked set to continue for the foreseeable future.

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Retail property sales remain above long term average: Savills

Retail sales, 12 months to September 2016, at a glance:

Adelaide

$649m up from $514m to September 2015 and up on the $466m five year average

Perth

$989m up from $525m to September 2015 and up on the $755m five year average

Melbourne

$2.1b down from $2.64b to September 2015 and up on the $1.86b five year average

Sydney

$2.3b up down from $2.9b to September 2015 and up on the $2.1b five year average

Brisbane

$2.39b down from $2.74b to September 2015 and up on the $1.93b five year average

Totals

$8.428b down from $9319b to September 2015 and up on the $7.11b five year average

Tags: 
Savills Retail Sales

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