Australia’s unique retail landscape provides an advantage over key western markets
This record year of investment sales, which marks a 38% increase on the five-year annual average of $7.1 billion, is partially due to the unique position Australian Retail property holds in the global landscape.
It is clear that investors still see value in the sector, in particular in retail centres that enjoy strong positioning in their catchments.
“The major difference between this year and previous years was the strong supply in the tightly held Regional centre category, which represented the largest value of transactions, at $3.54 billion,” said Lachlan MacGillivray
, Head of Retail Investment Services at Colliers International
“NSW dominated sales activity, accounting for just over one third or $3.56 billion in sales in FYE2018 – a 48% increase from FYE 2017. Victoria also increased sales volumes financial year on year - $2.71 billion of sales vs $1.58 billion the previous year; a 72% increase said Anneke Thompson
, National Director, Research at Colliers International.
“86% of all retail transactions for the FYE2018 were to domestic or undisclosed purchasers. Whilst the markets in Victoria and Queensland were dominated by institutional investors, New South Wales saw more private investors than any other buyer types during FYE18.”
The report also showcased key differences between major centres in the key Western markets of the USA, Canada, the UK and Australia, which have contributed to Australian retail centres continued robust performance.
“Due to rigid planning regimes, strong supermarket compositions, and high levels of catchment engagement, Australian centres have been able to maintain strong levels of repeat visitation, when compared to other markets such as the USA, UK and Canada,” said Mr MacGillivray.
“An analysis of some major centres across these courtries reveals pedestrian to catchment ratios as high as 46:1 in Australia (Westfield Bondi Junction), meaning this centre generates visits that are 46 times higher than its catchment.This is a common trend with Australian centres, consistently recording foot-traffic higher than comparable offshore centres, which typically have footfall to catchment ratios between 4:1 and 25:1.”
“The vast differences in our geographic make up means Austrlaia is the lowest supplied country of the major western retail markets, with only 28.9 sqm of retail space per square kilometre of habitable land, compared to 177.5 sqm in the USA, 50.4 sqm in Canada and 165 sqm in the UK.”
Major Australian shopping centres are also typically anchored by more than one supermarket, and use non-discretionary spending to drive discretionary sales and repeat visitations.
“The success of this strategy is evidenced by total footfall figures – in some cases larger than their offshore counterparts that have far higher trade areas,” Mr MacGillivray said.