Retail take smashes long term average
Investors splashed out almost $11 billion on Australian retail assets in the 12 months to June, smashing the five-year average by nearly $4 billion, according to Savills Australia’s latest research.
Tony Crabb, Savills national head of research, says investors purchased retail property worth more than $10.9 billion over the course of the year, up 35 per cent from the $8.1 billion recorded in the previous period, and up $4 billion on the $6.9 billion five-year average.
“This has been a massive result even given the tremendous investment market we have experienced over the last few years,” Crabb says.
All surveyed capital cities – Adelaide, Brisbane, Melbourne, Perth and Sydney – recorded significant rises particularly NSW, which was up $2 billion to $4.23 billion closely followed by Victoria ($2.6 billion up from $1.99 billion) and Brisbane ($2.7 billion up from $2.58 billion).
A number of major transactions were finalised during the reporting period. Blackstone purchased Vicinity Centres’ Rundle Place and 80 Grenfell Street in the Adelaide CBD in December for $400 million, and a three-centre portfolio from Scentre Group for $655.5 million in August.
In May, Blackstone acquired Clifford Gardens in Queensland, together with Forest Hill Chase and Brimbank Shopping Centre in Victoria for $613.3 million, while Mirvac picked up Toombul Shopping Centre in Brisbane for $233 million.
Savills expects the frenetic retail market to continue over the next financial year with another six Vicinity Centres retail assets on the market with a value of more than $200 million.
Steven Lerche, Savills national director of retail investments, says the figures reflect a very strong market with pent up demand driven by “retail property’s safe haven status”.
Lerche says investors will “continue to find Australia a transparent market where it’s easy to do business” but intense competition will see falling yields continue to break records. Any further interest rate cut would add fuel to the fire, he says.
Crabb notes that 30 per cent of purchases by value were made by foreign investors, followed by private investors (22 per cent), trusts (24 per cent) and funds (12 per cent).
“Foreign investors continue to play a key role in Australian property investment markets and while Australia continues to offer a safe, reliable and accessible investment destination, that will not change,” Crabb concludes.