Over $1 billion worth of neighbourhood and subregional shopping centres has been sold so far this year.
OVER $1 billion worth of neighbourhood and subregional shopping centres has been sold so far this year, despite weaker retail trading conditions, according to new market analysis from CBRE.
The amount of sales is already almost 37 per cent higher than last year's total, with more predicted for the remaining months of 2011.
So far this year, 38 neighbourhood and subregional shopping centres have changed hands, compared with 28 centres totalling $713 million in 2010.
''If the current momentum is maintained, we expect in the order of 60 neighbourhood and subregional sales to be concluded in 2011, particularly given that sales activity is traditionally higher in the second half of the year,'' said Steve Wakeham, CB Richard Ellis regional director of retail investments.
Mr Wakeham said demand for quality retail investment opportunities was continuing to increase, despite recent negativity from the impact of internet retailing and a slowdown in retail trade.
Four subregional shopping centres have been traded this year, including Centro Hervey Bay in Queensland, Carnes Hill Marketplace in Sydney, Ballina Central in northern New South Wales and Highlands Marketplace in the NSW Southern Highlands.
Meanwhile, 34 neighbourhood centres have also changed hands, with this sector of the market benefiting from its bias towards food and service retailing.
In Victoria, three neighbourhood centres have sold so far this year for a total of about $78 million.
Nationally, six CBRE deals are close to being concluded and at present are in due diligence. Mr Wakeham said the improved availability of debt funding and the higher volume of sales listings in 2011 were some of the factors behind the increase in sales activity. ''The recent volatility in the equity markets is also driving increased buyer interest in direct property.''
Institutional investors were the most active purchasers in 2011, according to Mr Wakeham.
At the top end, this included offshore institutional investors such as GIC and the Canadian Pension Plan Investment Board, alongside local A-REITs, particularly Charter Hall, as well as domestic superannuation funds.
He also said the Woolworths portfolio sale had been a key litmus test for the market. ''Charter Hall's purchase of eight Woolworths centres highlighted the attractiveness of well-located, convenient, supermarket-based centres with the portfolio attracting significant interest from both local and offshore investors.''
Mr Wakeham said the CBRE analysis excluded regional shopping centre sales, which tended to skew the results given the limited number and the high value attributed to such transactions.
The analysis also excludes the Lend Lease purchase of ING Retail.
Frequently Asked Questions about this Article…
What is the current trend in neighbourhood and subregional shopping centre sales according to the CBRE analysis?
CBRE reports more than $1 billion of neighbourhood and subregional shopping centres have been sold so far in 2011, with 38 centres changing hands. That sales volume is almost 37% higher than 2010’s total, and CBRE expects momentum could push the final 2011 tally toward about 60 transactions.
Why are retail property sales rising even though retail trading conditions and internet retailing are weaker?
CBRE found demand for quality retail investment opportunities is increasing despite weaker retail trade and internet competition. Factors cited include the resilience of centres biased to food and services, the attractiveness of well‑located supermarket‑based centres, improved availability of debt funding, and recent equity market volatility driving investors into direct property.
Which specific shopping centres were sold in 2011 and what types of centres are changing hands?
Four subregional centres traded in 2011 were Centro Hervey Bay (QLD), Carnes Hill Marketplace (Sydney), Ballina Central (northern NSW) and Highlands Marketplace (NSW Southern Highlands). In total 34 neighbourhood centres also changed hands, reflecting strong activity across both neighbourhood and subregional retail property segments.
Who are the main buyers of shopping centre assets in 2011?
Institutional investors were the most active buyers in 2011. That included offshore institutions such as GIC and the Canadian Pension Plan Investment Board, local A‑REITs (with Charter Hall mentioned specifically), and domestic superannuation funds.
How did the Woolworths portfolio sale influence the shopping centre investment market?
CBRE said the Woolworths portfolio sale acted as a key litmus test for the market. Charter Hall’s purchase of eight Woolworths centres highlighted the appeal of well‑located, convenient supermarket‑based centres and attracted significant interest from both local and offshore investors.
What role did debt funding availability and equity market volatility play in retail property investment activity?
Improved availability of debt funding and higher volumes of sales listings helped support increased transaction activity. Additionally, volatility in equity markets pushed more buyers toward direct property investment, according to CBRE.
Does the CBRE analysis include regional shopping centre sales or the Lend Lease purchase of ING Retail?
No. The CBRE analysis explicitly excludes regional shopping centre sales (which can skew results due to their high values and limited number) and also excludes the Lend Lease purchase of ING Retail.
What should everyday investors take away from the rise in shopping centre investment activity?
The article suggests growing investor demand for retail property, particularly for food‑and‑service biased and supermarket‑anchored neighbourhood centres. For everyday investors this could mean increased market listings and stronger institutional interest in retail property exposure (including A‑REITs), but the report does not provide personal financial advice—CBRE’s findings mainly describe market momentum and buyer trends.
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