Australia's sub-regional retail sector continues to attract strong offshore and domestic demand

Australia's sub-regional retail sector continues to attract strong offshore and domestic demand
Australia's sub-regional retail sector continues to attract strong offshore and domestic demand

Alceon Captrans JV have sold regional Brisbane shopping centre, Town Square Redbank Plains for an estimated $160 million to Singapore based Rockworth Capital Partners.

Simon Rooney, JLL’s head of retail investments for Australasia said he is seeing a very clear trend towards offshore investors increasingly driving acquisitions of quality Australian sub-regional assets – a trend that’s been building and gaining momentum in 2017.

“Sub-regional retail is the preferred asset class for many offshore groups seeking quality retail exposure, given the defensive and resilient characteristics and positive in built growth outlook," he said.

"Assets which are predominately food, service and convenience-based, with a high proportion of non-discretionary retail and limited fashion, offer enhanced and consistent returns and limit trading volatility.

"The lower rental profile of sub-regional centres also provide attractive opportunities for income and capital growth, via asset repositioning and tenancy re mixing.

“The comparative attractive yield profile available in the Australian retail sector, continues to offer strong relative value for offshore investors as evidenced by the recent transactions of Town Square Redbank Plains to Rockworth Capital and Casey Central, also sold by JLL to M&G Real Estate.

“Domestic institutions are also keenly pursuing sub-regional centres to secure above-benchmark total returns through active management and asset repositioning.

“The latest being the Charter Hall acquisition last week of Salamander Bay (NSW) for circa $175 million and reinforces the significant current interest in the sub-regional sub-sector.

Recent major sub-regional transactions above $50 million:

Centre

Purchase price

Cap Rate

Sale date

Vendor

Purchaser

Redbank Plains Town Square, QLD

$160,000,000

6.25%

Dec-16

Alceon Captrans

Rockworth

Salamander Bay Centre, NSW

$174,500,000

5.80%

May-17

Vicinity

Charter Hall

Arana Hills Plaza, QLD

$67,100,000

6.00%

Dec-16

ISPT

Charter Hall

Casey Central, VIC

$220,750,000

5.25%

Dec-16

Scentre Group

M&G

Campbelltown Mall, NSW

$197,000,000

6.00%

Sep-16

Perron Group

Charter Hall

“Combined with the current circa $3.5 billion Blackstone retail portfolio sale process, the current series of transactions would be expected to drive retail investment activity in Australia to a new record high in 2017.”

Tags: 
Brisbane Jll

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