Retail investment on rise

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.