A record $9 billion in retail property changed hands in 2015 – up 24 per cent on the year prior, according to data from CBRE.
“With trading activity in regional centres declining, the uplift was driven by activity in sub-regional and neighbourhood centres,” said Stephen McNabb, CBRE’s head of research, Australia.
“Sales in these sectors totalled $2.8 billion and $2.5 billion respectively and in both cases this was up by close to $1 billion on prior year levels.
“Higher transaction volumes for neighbourhood and sub-regional sectors coincided with a circa 40 basis point yield compression through 2015 in these sectors, which suggests investor confidence has been buoyed by the improved retail sales backdrop, stronger tenant demand and the increased opportunity for re-development and expansion,” McNabb said.
New CBRE sales data highlights that a total of $28.4 billion in commercial property changed hands in Australia in 2015, fuelled by unprecedented offshore buyer activity.
According to McNabb, in 2015 offshore investors purchased $11.7 billion of commercial real estate – which includes sales of office, industrial and retail property valued at over $5 million – accounting for 41 per cent of overall transaction activity, the highest annual percentage on record.
The retail sector also saw further offshore investment with an increase in net investment of $1.8 billion through 2015.
“Rising volumes of offshore investment reflect the relative attractiveness of Australia’s commercial property yields in a period when interest rates have been close to 2 per cent points above major developed markets globally,” McNabb said.
“The level of activity is also consistent with the trend towards globalisation and diversification. As a result of this, Australian investors are also beginning to export more capital offshore and we may see more of this in 2016, particularly as interest rates rise in overseas markets.”
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