Newcastle retail market slows down despite market confidence: HTW

Newcastle retail market slows down despite market confidence: HTW
Newcastle retail market slows down despite market confidence: HTW

Sales of retail properties in the Newcastle CBD continue to be slow, according to Herron Todd White’s latest report.

The property valuation firm says that there is a moderate level of confidence in the retail market; however, this is tempered somewhat due to major infrastructure projects not at the completion stage.

“As the new university campus on Hunter Street nears completion, which is expected mid 2017, we would expect to see more activity in the market as flow on from the influx of students and university staff to the CBD,” the report stated.

In addition to the university nearing completion the 1.66 hectare Hunter Street mall site was recently sold to a Sydney developer with plans to redevelop large portions on the site.

Early indications are that the development will include a large number of mixed use retail and residential developments, HTW noted.

“This will be a welcome change for the mall precinct, which has undergone a period of uncertainty during the time it was held by GPT.

Now, as some certainty comes back into this area we may see more activity,” the report stated.

The CBD is a tightly held market, and this is seen by the very low level of transactions in the past 12 months.

"This is not to say that there is no confidence in the market, more a willingness of owners and investors to wait for these major infrastructure projects to complete.

This willingness to wait for projects to complete is evidenced by the number of vacant retail shops in the immediate vicinity of these projects.

It is reasonable to presume that as projects progress these properties will be transacted, either as sales or rentals, as a result of the increased pedestrian traffic," the report stated.

HTW are seeing yields for retail properties in the mid 7 percent to 7.5 percent range.

It suggests confidence is definitely evident in the CBD and the next 6 to 12 months will provide good opportunities for current investors to maximise their returns as the number of people in the CBD increases.

"It will also make the CBD an attractive prospect for new investors and tenants, if these tightly held properties are put to market," HTW advised.

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