Feb 10 2018Add to Favorites
Offshore investor interest in Western Australia’s retail market is expected to intensify in 2018, building on the $48 million worth of assets transacted in 2017.
According to CBRE Research, $458 million worth of Western Australian retail assets changed hands in 2017, up from $398 in 2016. Highlight transactions include a 50% share in Vicinity Centre’s Rockingham Centre to AMP Capital for $305 million at a yield of 5.86%.
CBRE’s Richard Cash said demand for large format centres was strong in 2017, with buyers attracted to the secure cash flow generated from long lease terms to predominantly national tenants. The underlying land value of large format centres provides for longer term development upside given many centre’s are located on key thoroughfares.
In 2017, six large format retail assets change hands for $62.90 million – averaging a per square metre rate of $2,791 and yield of 7.51%.
Neighbourhood shopping centres experienced a drop-in transaction volumes from $210 million in 2016 to $35 million in 2017, albeit this is attributed to the lack of available stock rather than weaker investment appetite.
“Neighbourhood centres remain more defensive in nature against online retail and are therefore extremely sought after in the market, particularly given a large proportion of their income is generated by major anchor tenants such as Woolworths or Coles on long term leases,” Mr Cash said.
“While supply of these assets was limited in 2017, the strengthening market and state economy will provide more confidence for shopping centre owners to test the current demand.”
CBRE’s Anthony Del Borrello said Western Australia’s retail market would continue to gain momentum in 2018, fuelled by an upturn in offshore investor interest.
“Offshore investors - mainly made up of Singaporean investors - accounted for 28% of retail purchases in Western Australia in 2017. We expect to see this flow of capital continue given the attractive yield spread, stabilisation of the Western Australian economy and Asia’s relative proximity to Perth.”
The changing and competitive retail environment is driving transaction activity for shopping centres, as owners refine their portfolios, adjust their exposure to different states and asset types and seek greater diversification to improve their long-term risk-return profile.
More private investors will have access to individual, first mortgage secured loans, which produce a monthly income, via an online platform launched by Balmain Private.
In November 2017, real estate investment manager and advisory group, Ashe Morgan, closed its capital raising for its recent purchase of the Health and Forestry buildings in Brisbane adding to the assets it now manages on behalf of its investors.
Australia / Brisbane
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