Queensland retail property transactions hit 10 year high: Savills
A rush of institutional buyer interest is sweeping across Queensland, with retail property transactions hitting a 10 year high in the 12 months to September.
New figures from Savills Australia' Retail Queensland report showed that retail property transactions - based on transactions above $5 million - surged from $1.46 billion to 2.2 billion in the 12 months to September in the state, the highest point based on the data which stretches to September 2003.
The figures not only showed an increase in transaction activity - which came in well above the five year average of $1.13 billion - but also revealed a spike in the average size of transaction throughout the state. The average size of retail transaction rose from $48 million in the previous year to $73 million, "reflecting the increased appetite for sub-regional and regional scale assets from institutional buyers," the report said.
Underpinning that investment activity was the higher investor demand from private and institutional buyers, while improved yields have seen renewed appetite for bulky goods centres.
"Investors are sensing the outlook for retail property with a five year horizon is better than commercial offices, given that the national office vacancy has drifted above 10% with the major office markets all likely to go higher as new developments enter," said Savills Queensland retail sales director Peter Tyson.
"Accordingly, many of the institutional investors have signalled their desire to acquire more quality retail assets suggesting yields are as generous as they are going to get".
Properties in the $10 million - $50 million price range proved the most popular, accounting for about 52% of the total number of properties transacted.
Mr Tyson said that one of the key criteria that investors were looking for was a balanced tenancy mix. "That is, the right number of specialties-to-anchor ratio and the right variety amongst the specialty tenants," he added.
Savills research director in Queensland Paul Day was upbeat about the outlook for retail cross the aboard, citing the record low interest rates, unemployment stabilising - likely to be contained below 6.5% -and household savings at a 20 year high.
The early signs are particularly upbeat for Queensland, which is already outperforming the states with 3.2% trend growth in retail turnover, double the Australian average for the 12 months to July, it noted.
"We see a jump in retail trade turnover coming which will enliven the sector and the economy in general," said Mr Day.
"With the low cost of debt and improving prospects, appetite for investment retail property is likely to escalate with a subsequent tightening in yields for prime assets.”