Investment has returned to the retail market throughout Australia and investment levels continue to increase as the market stability.
Into the future, this trend is expected to continue to improve as economic confidence and employment grows, retail spending returns and interest rates remain on hold.
There have been a number of signs of increasing confidence over the past few months and the retail sector has generated surprisingly positive trading results.
The recapitalization of Real Estate Investment Trusts (REITs) has seen many local buyers return to the market and a number of offshore investors have remained in the market because of Australia’s strong economic growth prospects.
While retail assets remain highly sought after, investors have become more selective in their acquisitions. Larger retail assets are becoming more popular in 2010 as investors re-visit their overall investment strategies and attempt to position themselves for the next cycle. The value of neighborhood shopping centers is likely to remain stagnant, and construction and development activity is expected to continue to rise over the next five years.
Continued expansion plans by retailers is supportive of investors’ increased focus on the redevelopment pipeline, with investors finding it hard to access new investment stock.
A stabilization of yields in 2010 has given owners the confidence they need to test the market for larger assets.
Australian commercial retail sales transactions totaled close to $3.183 billion at the end of the September quarter, exceeding the $2.539 billion total annual sales figure recorded for the full year of 2009.
Tara Downey is Communications Officer for McGees Property, Brisbane. She has a media background spanning more than 10 years with working experience in business reporting, travel writing and newspaper journalism. McGees Property specialises in commercial real estate with our successful and highly skilled sales, leasing, valuations and professional services, and asset management teams.