FYE 2017 was a big year for neighbourhood transactions with over $2.06 billion in transactions recorded and the sector representing 31.02 per cent of the retail investment market.
Investment into the neighbourhood sector grew by over 32 per cent from the FYE2016 year on the back of a large increase in transactions occurring in Queensland, with 32 sales over $828 million accounting for over 43 over cent of all neighbourhood centres sold nationally. Activity within the neighbourhood market was focused primarily within New South Wales and Queensland, the two states representing almost 71 per cent of transactions within the retail sector. By quantum, this equates to over $1.356 billion in sales. SCA Property Group were the most active purchasers of neighbourhood centres, acquiring over $306 million in the sector over 10 transactions.
There were no transactions over $50 million through FYE2017, with the average transaction occurring at a price point over $27.84 million which is higher than the average sale price during the record year of FYE2015. The activity at this sub $50 million price point highlights the opportunities available to private investors within the market, who were very active throughout the year, making up over 50 per cent of purchasers and over 54 per cent of vendors.
The largest single neighbourhood transaction during FYE2017 was Marketfair Campbelltown in western Sydney, New South Wales. The centre was purchased by Fort Street Real estate Capital for $48.25 million at a yield of 6.31 per cent, falling within Colliers International New South Wales neighbourhood shopping centre yield band of 5-7 per cent.
The high frequency of sales volumes within the neighbourhood sector has facilitated an element of repricing to occur across the asset class, with average national yields compressing 38 basis points to 6.5 per cent over the 12 months to 30 June 2017. This was led by Victoria and New South Wales where average yields compressed 65 basis points to 5.73 per cent and 6 per cent respectively. Yield compression was less pronounced in Perth and Brisbane where average neighbourhood yields currently sit at 6.75 per cent and 7.63 per cent respectively.