Specialty retail property loses value: RBA

The Reserve Bank of Australia has acknowledged the challenges facing retail property.

“Property values for speciality retail stores in large suburban shopping centres are estimated to have fallen by around 9% over the two years from their peak in late 2007.

“Smaller centres fared worse, with property values having fallen by around 15% from their peak.

“Over this period, vacancy rates increased and growth in gross market rents slowed, with growth in rents slightly firmer in CBDs and larger suburban locations than in smaller neighbourhood centres.

“More recently, gross rents for CBD retail properties were flat over the year to June, although there have been reports of solid growth in rents in certain premium locations.

“Property values in suburban centres have recovered somewhat from their lows, having increased by around 2% over the past year. Overall, the outlook for retail property remains subdued reflecting modest growth in retail spending.”