Retail sector defies prophets of doom with profits in sales

INVESTORS are defying the retail sector's doomsayers, with 83 big sales valued at $4.244 billion in 2011-12, 8 per cent more than the previous financial year.

INVESTORS are defying the retail sector's doomsayers, with 83 big sales valued at $4.244 billion in 2011-12, 8 per cent more than the previous financial year.

The latest Colliers International National Retail Investment Review 2011/12, which covers transactions greater than $10 million in Australia, found that nearly all of the top 10 largest sales in 2011-12 took place in the first half of this calendar year.

Lachlan MacGillivray, Colliers' national director of retail investment services, said investor demand for quality shopping centres was resilient despite volatility in monthly retail trade data and the structural challenges the sector was facing.

Also, interest in prime regional shopping centres had been strong from institutional investors from Australia and overseas, with demand exceeding supply.

"Increased demand came from domestic wholesale funds, as well as offshore sovereign and pension funds," he said.

Mr MacGillivray said overseas purchasers were keen to form joint ventures with local retail players. Sales of half-shares in prime assets had surged, with seven of the top 10 sales in 2011-12 being for 50 per cent shares. Overseas interest was particularly strong for prime regional and sub-regional assets.

Neighbourhood centres led activity with 35 sales, but interest in regional centres was historically high, with seven centres comprising 44 per cent of all sales by value.

"The number of sub-regional centres sold tripled to 15, which was the largest jump in sales volume of all sectors," he said.

Nora Farren, Colliers' research director, said it was the market's largest positive spread between bond yields and property yields in more than a decade, and demand for assets should outstrip supply for the rest of the year.

Ms Farren said the retail investment market had been strongest in Queensland, with 26 sales, including three of the top 10 sales recorded.

These were a 50 per cent share in the Myer Centre Brisbane by the Industry Superannuation Property Trust for $366 million, a 50 per cent share in the Cairns Central shopping centre for $261 million by Australian Prime Property Fund Retail, and Noosa Civic at Noosaville for $200 million, to the Queensland Investment Corporation.

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