Aussie Shopping Centres Attract More Foreign Investment

The latest research reveals a strong offshore demand currently being experienced for strategic retail investments, with offshore buyers accounting for 51% of transactions in the first half of 2016.

Foreign investment in Australian shopping centres was tracked by CBRE’s latest Retail Marketview research report, which indicates foreign investment levels are currently well above 2014 and 2015 numbers, where offshore groups accounted for 13% and 14% of transactions respectively.

CBRE Senior Research Manager, Australia, Danny Lee said foreign investment has more than doubled over the past 12 months, as testament to the ongoing buyer confidence in the retail sector.

According to CBRE National Director of Retail Investments Mark Wizel, foreign investors have typically focussed on core CBD assets, but are increasingly venturing into non-CBD markets.

“This is primarily due to the lack of available stock currently on the market in prime CBD locations, which is driving investors to target alternative assets, including regional, sub regional and neighbourhood shopping centres,” he said.

This trend was exemplified in the past quarter with property management company Vicinity’s $841m divestment of four centres, three of which were acquired by American investment firm, Blackstone Group.

The report further showed a significant uptick in investment across the broader retail sector, with retail property investment transactions increasing significantly from $0.7b in Q1 to $3.1b in Q2 – 36% of which was acquired by foreign groups.

“Australian retail is being viewed as a relatively secure investment for offshore purchasers, underpinned by consistent growth in retail trade, with a 3.5% increase in Q2, increased tourism and comparatively stable economic conditions in the Australian market,” said Mr Wizel.

National regional, sub regional and neighbourhood centre rents also experienced growth over the past 12 months, at 1.3%, 0.8% and 1.4% respectively.

These rents are expected to continue to grow at a moderate rate over the next 12 months.