This article is from the Australian Property Journal archive
WESTERN Australia’s retail sector outperformed the nation in the first quarter of 2019, as yields tightened across its shopping centre transactions.
CBRE’s Retail MarketView for the March quarter showed WA recorded a 0.9% increase from the previous quarter, ahead of the national average increase of 0.7%.
Queensland and Victoria both saw a 0.8% increase, followed by New South Wales with a 0.5% lift. South Australia was up slightly, and the Northern Territory turnover was down 0.4%.
Australian Bureau of Statistics data shows retail growth came in at 3.51% over the year to March. Clothing, footwear and personal accessories recorded a 5.88% increase, supermarket retailers of 5.40%, cafés, restaurants and takeaway food services 4.77%, and food retailing 4.46%.
Investment activity in WA’s retail sector has seen $91.4 million of assets change hands during the first three months of 2019, according to CBRE, representing a year-on-year increase of 8.1%, while shopping centre yields have slightly sharpened from 2018, averaging 6.2%.
This week, the Vicinity Retail Partnership and a Vicinity Centres mandate client put the 68,600 sqm Midland Gate regional shopping centre in Perth’s eastern suburbs to the market, having just completed a $100 million redevelopment and expansion.
The $149 billion Future Fund put a half share in the Lakeside Joondalup shopping centre to the market with expectations of $650 million late last year.
According to CBRE, national retail investment activity fell 50% over the first quarter of this year, from $1.27 billion to $623 million. Investment volumes are expected to increase significantly over the remainder of the year as investors look to reweight portfolios.
Among those is Stockland, which is continuing its $1 billion sell-off of non-core retail assets as it aims to reweight its portfolio exposure to the workplace and logistics sector from 21% to between 25% and 35% over five years.
However, Citi analysts recently warned that values could be pushed lower with around $11 billion of retail assets set to flood the market.
Vicinity Centres put its $1 billion divestment program of non-core assets on ice early in the year, as well as the launch of a new wholesale property fund with Singaporean group Keppel Capital, preferring to wait for retail headwinds to ease.
CBRE’s Richard Cash said momentum would continue to build in the WA retail sector.
“We expect to see yields for A-grade supermarkets and neighbourhood shopping centres strengthen throughout 2019, fuelled by an influx of new buyers entering the market locally, nationally and globally,” Cash said.
CBRE is currently marketing the sale of the former Ballajura Supa IGA in Perth and Bluff Point Shopping Centre, north of Geraldton.
The 3,042 sqm former IGA supermarket, within the Ballajura City Shopping Centre, has a guaranteed holding income of $430,000 per annum until 2021.
Bluff Point is a neighbourhood shopping centre on a 1.28-hectare corner site and is anchored by Terry White Chemmart and Bluff Point Medical Centre.
CBRE’s Anthony Del Borrello said there was likely to be an uptick in the amount of sub-regional shopping centre sales coming to the market as owners reassessed their exposure to this asset class.
“Demand for sub-regional centres is likely to stem from a couple of different sources – offshore groups interested in landbanking income producing assets in growing locations and value-driven retail owners, who are looking to generate income growth through active and innovative asset management.”
Australian Property Journal
