Sales plummet as assets dry up

Australian retail property trading was worth a total of $6.84 billion in 2019, a 19 per cent drop year-on-year, and the lowest total transaction value for the retail investment market since 2011, according to Colliers International’s annual Capital Markets Investment Review.

Regional centre sales accounted for the largest dollar share of the retail investment market with $1.82 billion of centres trading in 2019, down 6 per cent YoY.

Retail investment volumes were constrained by fewer assets being brought to market, with a 10 per cent fall in the number of assets sold in 2019 when compared to 2018.

The report found that despite the continued growth of online retail, bricks-and-mortar stores remain an essential part of the retail landscape, however, for shopping centre landlords, there has been a shift towards more service-based tenancies.

Regional shopping centres, however, were still highly sought after, with refurbishments undertaken to position them for growth.

Private investors were the dominant purchaser group across the board, accounting for 47 per cent of all retail transactions in 2019, by dollar value. Institutional Investors were the second-most active purchaser group by dollar value, accounting for 39 per cent of total retail transactions. Institutional Investors have contracted from the retail market relative to their market share in 2018, where they accounted for 59 per cent of all transactions.

The Sydney CBD recorded the highest sales activity in 2019, with $520.1 million in sales, which by dollar value, accounted for 59 per cent of retail CBD transactions nationally. Queensland followed closely behind with $342.1 million in sales recorded, accounting for 39 per cent of retail CBD transactions nationally.

The sale of one of Sydney’s newest and most diverse retail precincts, Central Park Retail, marked the single largest pure-play retail transaction within this sub-sector for 2019. It was acquired by Fortius Funds Management with Singapore-based SC Capital from Frasers Property Australia and Sekisui House Australia for $174.5 million at a fully leased yield of 5.50 per cent.

In Queensland, Queen and Albert on Queen Street Mall was offered to the market for the first time ever in 2019. The sale of this asset for $77.1 million to Marquette Properties on a capitalisation rate of 5.60 per cent confirmed the demand for rarely traded trophy assets.

Colliers expects Australian retail property transaction levels to remain stable in 2020 with strategic capital looking for opportunities in the market.

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