This article is from the Australian Property Journal archive
PERTH-based RG Property has decided to sell the newly built The Village Dandenong shopping centre in Melbourne’s south-east.
Opened in 2015, The Village is a convenience based neighbourhood shopping centre, anchored by a 15-year lease to Woolworths (3,800sqm) with fixed 5% annual increase every five years, BWS and 15 specialty retail tenancies, on a net operating income of $1,796,674 per annum.
The centre occupies a 18,790sqm land parcel which is passed by 26,000 cars daily and is positioned adjacent to the new ‘Series 7’ Bunnings Warehouse store with projected opening of 31 July 2017.
The centre is expected to fetch in excess of $30 million.
RG Property has appointed JLL retail investments directors, Stuart Taylor, Jacob Swan and Stephen Bolton in conjunction with CBRE’s Justin Dowers and Mark Wizel, to sell the property via an international expressions of interest campaign.
RG Property CEO Rhett Williams said the group has seen growth in the asset since 2015 and expect the purchaser will continue to enjoy growth with the entrance of Bunnings into the precinct.
JLL’s Taylor said retail assets with strong lease covenants such as Woolworths continue to be hotly contested.
“With high liquidity levels in the market, these assets attract investors as they are considered to be low risk, defensive assets, offering strong security of income.
“Australian retail yields are notably higher than the average recorded on the global stage. Therefore allowing a larger return on investment on Australian retail assets relative to other established markets including London, Paris and Singapore.
“The yield compression in Australia has lagged that of other major markets which has resulted in a wave of offshore capital being directed into the market for the comparative higher retail yield,” Taylor said.
CBRE’s Dowers said yield compression has also been supported by the strength of the retail investment landscape in Victoria over the last 12 months with neighbourhood centres now regularly transacting at low 5% yields.
Australian Property Journal
