Melbourne, 8 October 2015 – Low interest rates are driving an increase in Australian buyers looking for retail investments along the Eastern seaboard. Private investors are focused on well leased properties, with Mark Wizel and Justin Dowers from CBRE’s Victorian Retail Investments recently selling Civic Square Shopping Centre for $30.51 million, representing a sharp passing yield of 6.17%.
Built in 1986, the 6,371sqm neighbourhood shopping centre is anchored by a 3,536sqm
Woolworths supermarket, as well as 18 specialty retailers. Mr Wizel said the sale of Civic Square Shopping Centre in Croydon demonstrates the ongoing keen interest that buyers have in the sub $50 million Victorian retail investment market.
“The sale adds to the recent sales of other shopping centres in Melbourne’s outer Eastern suburbs, these include Mountain High Shopping Centre ($22.5 million), Croydon Central ($41 million) and Maroondah Village Shopping Centre ($13 million),” Mr Wizel said.
The campaign was keenly contested with 14 offers registered at the close of the Expressions of Interest process, with the current vendors having owned the asset for almost 30 years.
“Vendors are gaining in confidence to offer their Victorian retail assets to a market that is paying them full value when given the opportunity to acquire.”
The CBRE Victorian Retail Investments team has seen eight properties recently transact totaling $88.71 million as buyers are imminently meeting vendor’s expectations when suitable properties are offered for sale to the market.
“It has been a very eye opening three weeks for our team. We saw serious activity during the strong 2007 market but what we have witnessed and continue to witness in this space in 2015 has taken activity to a whole new level,” Mr Wizel added.
Leading the charge was the $14 million sale of a Woolworths Supermarket in Moe in
Victoria’s Latrobe Valley region. The property sold to a local Melbourne investor on a yield reflecting just under 6%.
“We received 11 offers when the Expressions of Interest campaign closed,” Mr Dowers said.
“It is great for our vendors to be working in a market where there is genuine competitive tension between buyers wanting to secure a piece of Victoria’s Retail Investment Market.”
One of the big beneficiaries of the favourable selling conditions has been well known Retail Developer Lascorp headed by Michael Lasky.
“We have sold several properties for Lascorp this year including the $9.4 million (4.97% yield) sale of Culburra Beach Woolworths in New South Wales and more recently the Chelsea Beach Arcade for $8.3 million (6.37% yield).
“Seasoned players in the retail investment space are quickly seeing the strength that buyers are showing when assessing value for opportunities that come to the market,” Mr Wizel said.
Other properties to have sold in the past three weeks include Coles in Launceston which sold on a passing yield of just 5.69%, Strathfieldsaye IGA 6.86% and Foodworks in
Gisborne that transacted on a sharp yield of 5.8%.
“I think what these sales show you is that investors are no longer looking at the second grade supermarkets as they may have done in the past,” Mr Dowers said.
“Interestingly, the sale of Coles Launceston is arguably one of the strongest for 2015 so far. Whilst it’s not a massive amount of money, to sell an asset in Tasmania with less than four years left on the lease to the sole tenant speaks volumes of how strong the current conditions are for vendors,” Mr Dowers added.
“We had significant interest across the board from a range of private, institutional and wholesale funds all looking to secure high quality nondiscretionary retail assets before further anticipated yield compression occurs.”
For Australian/international news or global stories, follow us on Twitter.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
