Retail property deals hit record levels

Retail property deals hit record levels

20 April 2018

Retail property transactions hit $8.8 billion in 2017, the second highest annual figure on record, after rebounding in the second half following a slow start, reports the AFR.

Pushing the deal flow higher were five major transactions that were all above $300 million; those deals totalled $3.3 billion, the highest volume of transactions above $300 million on record.

The largest trades included the $1.1bn Vicinity Centres/GIC asset swap, the half stake in Indooroopilly Shopping Centre for about $800m, the $680m quarter stake in Melbourne’s Highpoint, the $436m deal for Home Hub Castle Hill and Home Hub Marsden Park in Sydney, and a $305m half stake in Rockingham Shopping Centre, in Western Australia.

JLL’s head of retail investments for Australasia, Simon Rooney, expects high-quality retail assets to remain resilient and deliver attractive returns and therefore be highly sought after by investors.

The arrival of Amazon’s local operation could take about 0.5 per cent a year from bricks-and-mortar retail turnover growth, JLL estimated, with landlords responding by adding more food outlets and refurbishing centres, says The Australian.

Last year saw the highest volume of transactions worth more than $300 million on record.

The share of assets bought by offshore investors fell to 16 per cent during the year, from more than a third in the prior year.

Unlisted funds were the biggest buyer group in 2017 by a significant margin, snapping up $3 billion, or 34 per cent of total transactions.

AMP Capital and GPT accounted for more than three-quarters of the activity. Among AMP Capital’s big deals, it also acquired a 50 per cent share in Rockingham Shopping Centre for $305 million from a wholesale fund managed by Vicinity Centres.

AMP Capital was the biggest buyer of retail assets in 2017, buying $1.5 billion in assets, excluding its agreement to acquire the Gasworks Plaza at the end of last year.

Vicinity Centres was the most active group over the course of the year, completing $1.9 billion in transactions – both divestments and acquisitions – as it pursues a broader reworking of its portfolio.

CBD retail, particularly in Sydney in Melbourne, is likely to perform more strongly this year, JLL said.

JLL retail property transactions

Source: JLL