Colliers International releases their 2019 Retail Investment Review
Evolutionary-led changes to the composition of Australian shopping centres are key factors underpinning the resilience of bricks-and-mortar retailing, according to Colliers International’s latest Retail Investment Review.
The report found that despite global headwinds across other markets, the Australian retail investment market has remained relatively resilient and continues to grow, which is primarily due to the nation’s shopping habits.
Around 20% of Australian customers prefer to shop exclusively in-store, which is the highest proportion of any country within the Asia Pacific Region (Rakuten Marketing). Just 2% of consumers in Australia would buy exclusively online. In comparison, 7 per cent of American consumers are making their retail purchases online exclusively (Google Surveys, 2018).
“Because of the way Australian consumers choose to purchase their goods, retail sales at brick-and-mortar stores still account for about 95% of all retail activity in Australia, outperforming the US (circa 90%) and the UK (82%),” said Lachlan MacGillivray, Head of Retail Investment Services at Colliers International.
“Numerous case studies have shown that online and offline retailing in Australia are complementary as opposed to supplementary, as an overwhelming number (78%) of Australian consumers would shop both offline and online simultaneously,” said Alex Pham, Director of Retail Research at Colliers International.
“As a result, Australian retailers are increasingly adopting and benefitting from a multi-channel retailing strategy for their business.”
“As well as our tendency to favour bricks-and mortar-stores over online shopping, Australia’s average visitation per catchment ratios are among the highest in the world and the per capital supply of retail space in Australia is still relatively low compared to other developed markets, which aids the resilience our retail property market,” Mr MacGillivray said.
“The Australian population continues to grow at one of the fastest rates in the world and consumers are very distinctive, with a strong sense of attachment to their local communities and favouritism towards fresh produces and locally-made products.”
“This has led to a rise in ‘localism’ which is becoming a major influence on consumer preference and purchasing decisions, evidenced by the fact that almost 90% of Australians prefer to shop regularly at their local stores according to Relationships Australia.”
Colliers’ report found that strong investor demand in the Australian retail property market continued throughout 2018 but was constrained by the lack of quality stock on the market.
2018CY recorded $8.25 billion in retail property transactions (over $10 million), a figure that is 12% lower than the all time high recorded in the previous year. Despite limited availability, high quality centres underpinned by strong catchments continued to attract strong yields.
Neighbourhood Centres transacted more than any other retail category, accounting for 35% of sales, while Sub-regional centres accounted for the highest total value of sales in 2018, with more than $2.08 billion worth of assets sold – a 118% increase compared to the year prior. Domestic investors were responsible for 79% of total transaction value, showing local confidence in shopping centres that meet the needs of their catchments.