NSW Shopping centres targeted by emerging capital

New arrivals RAM and Panthera indicative of new domestic and offshore purchasers.

Neighbourhood shopping centres in NSW experienced a 25% growth in transaction volumes over the last financial year on the back of unprecedented purchaser demand, according to Colliers International.

This sharp increase in transaction volumes translated to a figure of $527,950,000 and was registered over 18 neighbourhood shopping centre transactions; almost double the number of transactions seen in the previous financial year.

James Wilson, Director of Retail Investment Services at Colliers International says NSW has seen an emergence of new purchasers successfully targeting NSW shopping centres over the past 12 months, with the most notable examples being RAM and Panthera Property Group.

“Prior to July 2016 neither RAM or Panthera Property Group had purchased a single shopping centre in NSW, and as of June 30 this year, both groups have now acquired a combined $200 million worth of NSW shopping centres,” said Mr Wilson.

“RAM’s activity presents a significant change in the competitive landscape for NSW Neighbourhood shopping centres, highlighting the appetite from offshore capital to invest in the resilient neighbourhood shopping centre sector by focussing on the underlying performance of the asset.”

“This has taken them outside of metropolitan Sydney, which has historically been a boundary for overseas investors.”

“RAM will continue to target non-discretionary backed retail assets that align with our refined defensive shopping centre acquisition strategy,” said Will Gray, Managing Director, Head of Real Estate at RAM.

“We find the risk return metrics to be appropriate for our investors.  Whilst we have acquired a metropolitan Sydney centre we continue to see value in certain regional NSW catchments, so we tend to be not as contained on geography as some other groups are.”

RAM acquired over $130 million worth of NSW Shopping Centres over the last 12 months comprising of four neighbourhood shopping centres, including the Sentinel neighbourhood portfolio for $44,500,000, in addition to the Sydney metropolitan neighbourhood transaction of The Broadway Plaza in Punchbowl for $41.2 million.

“The increase in offshore interest targeting NSW retail investments has resulted in close to 30% of NSW Neighbourhood transactions being acquired with offshore capital,” said James Wilson.

“This increase in domestic and offshore interest has seen the NSW Colliers International Retail Investment Services team experience a 100% increase in the number of enquiries per campaign over the last 3 years, with the sale of Coles Five Dock for $19.66 million at 4.89% eclipsing 200 enquiries during the campaign.”

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