Brisbane's retail market outlook remains positive: HTW

The outlook for retail markets in Brisbane continues to be generally positive, according to Herron Todd White’s latest report.

The property valuation firm says that however there is now an increasing perception that yields may finally have reached a low point.

“To put the story of recent years into perspective, we have seen retail yields generally move by between 150 and 200 basis points, which based on a starting yield of say 8 percent, translates to capital growth of upwards of 25 percent over a three year period.

 In some instances, capital growth has been upward of 35 percent,” the report stated.

Sales activity has been moderate for the quarter.

Major transactions include Arana Hills Kmart at $67 million, Everton Plaza at $27.5 million and Caboolture Square at $27.5 million.

These showed yields of between 6 percent and 7.25 percent.

At the convenience end of the spectrum there has been less activity with only two centres selling under $10 million.

Both of these were in the North Lakes region and showed yields of between 6.5 percent and 7 percent, the report stated.

Overall, the volume of sales activity has generally been low, primarily as a result of a shortage of stock and lack of other strong yielding investment options.

“With the perception however that yields will be bottoming out, we anticipate a rise in investment sales activity, particularly if interest rates start to rise and there is any suggestion of capital values starting to fall,” the report predicted.

Retail rentals continue to be reasonably restrained with ongoing difficult trading conditions in many sectors putting the brakes on rental growth.

The weakness is evident across the board as high levels of competition, flat wages, internet retailing and changing consumer shopping patterns all contribute to a very tough retail environment.

Good buying opportunities in the market are limited at present as all reasonable assets are heavily scrutinised by a wide number of investors.

There is potentially some more opportunity to value add with secondary centres but even these are holding their value fairly well making owners reluctant to sell.