International investment fund, Blackstone, has purchased Adelaide’s luxury retail precinct, Rundle Place, in a deal worth over $400 million. The acquisition marks the US private equity firm’s first foray into Adelaide’s commercial market and represents the largest individual property transaction within the city. Grenfell Street office tower, which sits above the shopping centre, is included within the deal, which sees Blackstone seek to capitalise on higher returns in the redeveloped
space than Sydney and Melbourne. Real estate firm Jones Lang LaSalle’s head of retail investments, Simon Rooney, and head of office investments, Rob Sewell, brokered the deal.
Rundle Place is located on the old Harris Scarfe site and was redeveloped two years ago for $385 million. The shopping centre includes over 80 specialty stores and a total of 22,500sqm of retail space spread over four levels. The Grenfell Street office tower provides 30,000sqm of office space over 12 levels, and parking for 100 cars.
“Adelaide is seen as a coreplus market, offering greater value with a 100-150 basis points spread compared to the Sydney and Melbourne CBD markets,” JLL MD, Jamie Guerra, told Inside Retail Weekly. “The high level of funds chasing assets along the east coast is having a flow-on impact, with institutional and interstate syndicate buyers actively looking at $20 million plus assets in Adelaide chasing yield.
“In addition, offshore buyers are becoming active in Adelaide CBD development sites, with residential sites seen as very good value against other states.”
International investors are attracted to quality real estate opportunities in Australia due to attributes including transparency, good market data availability, fair transaction process, high standards in regulatory, accounting and corporate governance, according to Guerra.
“We are experiencing greater international activity, specifically in Adelaide, due to the tightening in east coast markets and relatively attractive returns on offer in our market. Another recent example is the JLL transacted Myer Centre for $288 million to Singapore based Starthill Group, who were attracted to the quality of the investment and the potential growth resulting from government infrastructure spending such as the new Royal Adelaide Hospital, Adelaide Oval upgrade, free city tram and planned expansion plans.”
Further interest and acquisitions are expected as core investment offerings are brought to market, with international retailers taking notice of developments within the South Australian state. “We have seen the start of international retailers prepared to establish in Adelaide, such as Apple, Max Mara, Tiffany & Co etcetera,” said Guerra. “And the investment of international funds will naturally see more of these brands discuss Adelaide as a location.”
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