This article is from the Australian Property Journal archive
SALES of bulky good retail centres have bounced back across Australia as investors scour the market for prime, well-leased properties in strategic high-growth areas, according to Savills.
Savills research shows $487 million worth of bulky goods centres changed hands in the year to March 2010, in 31 transactions — up from $336 million in the previous year.
Savills’ national head of research Tony Crabb said the sector is witnessing renewed transactional activity, with private investors dominating.
“The sector now seems to be taking off again, with investors actively seeking centres with the right retail mix in high population growth areas, most notably in Queensland and Victoria.
“These states are leading the way in Australia’s greatest ever population boom. As a result, houses are undersupplied and bulky goods as an investment have attractively re-priced themselves,” he added.
Some of the major bulky goods sales negotiated by Savills include the Geelong Homemaker Centre in Victoria for $34.3 million, Bunnings Nerang in Queensland for $16.35 million and Harvey Norman Rothwell also in Queensland for $14.9 million. Bunnings Rockdale in New South Wales was also transacted for $25.3 million.
And recently Savills concluded the sale of GPT Group’s Homemaker City centre at Bankstown in Western Sydney for $25.2 million.
Savills QLD divisional director of retail sales Peter Tyson believes the sector has been oversold.
He said whilst the retail sector proved to be remarkably resilient over the last two years during the GFC, the expectation of lower discretionary spending meant the perceived impact on the bulky and homemaker retail sub-sector was worse than in reality.
“Yields across the sub-sector have softened between 150 and 300 basis points, arguably suffering the most pronounced blow-out in the retail sector. Many investors now recognise the sector has been oversold, and yields currently on offer represent some of the highest returns in the marketplace,” he continued.
Tyson said as the market continues to stabilise and the weight of money increases, yields will once again firm, driving capital growth.
Savills QLD head of research Paul Day said yields in his state have ranged quite widely from 8.5% to 10.5%, reflecting the range of quality in these assets.
“While bulky goods centres as an investment asset have been popular, particularly in Queensland which has experienced strong population growth over a long period, the sector is still evolving and as yet not all centres are getting the formula right.
“It is now clear that the drop off in discretionary spending was not nearly as severe as initially thought it would be when the economic downturn first hit, so it is likely that the bulky goods sector will enjoy solid growth going forward,” Day concluded.
Australian Property Journal
