Retail investment activity still growing

Retail investment activity still growingRetail investment activity continues to grow, achieving record transaction volumes for the third consecutive calendar year, according to research from JLL.Retail investment activity hit the $7.5-billion mark in 2014, led by the subregional and neighbourhood sectors and “some major non-traditional retail assets”.JLL also acknowledged the depreciating dollar, the decline in oil prices and “another competitive year for retail investments”, with competition for assets driving yield compression in the retail investment sector. Furthermore, 2014 “marked the first year where significant compression was broad based across the market since 2007″.”Despite record transaction volumes for each of the last three years, the pool of capital seeking opportunities is continuing to expand and market conditions are likely to remain highly competitive through 2015,” said Simon Rooney, JLL’s head of Retail Investments – Australasia.”The defensive characteristics of the retail sector remain attractive to a range of different domestic and offshore investor groups, including various SWFs and global pension funds looking for large, stable assets with strong risk-adjusted returns.”According to JLL’s ‘Australian Shopping Centre Investment Review & Outlook’, 2014 was the third-highest year for acquisitions by offshore investors and the third-highest year for asset sales.”There was also a high level of demand from high-net-worth offshore private investors, with as many as 13 transactions totalling $294 million, with investors from Singapore, China, Hong Kong and Taiwan,” noted Rooney.”While offshore investors and superannuation funds were less aggressive net purchasers of assets in 2014, they remain a key driver of investment activity as a result of their indirect exposures through unlisted wholesale funds.”The report forecasts a positive year ahead for retail, with Rooney suggesting joint-venture transactions will continue in 2015 “as domestic owners reduce their exposure to large, mature assets to fund development and acquisition opportunities”.”There is also a highly active and strengthening buyer market for smaller and mid-sized value-add and opportunistic-style assets. More investors will be taking the opportunity to trade out of some investments made through the GFC to recycle capital into new ventures,” Rooney added.To download the report click here.