Perth Retail Market Q3 2023

Key Points:

• WA’s retail sales growth continues to decelerate, as higher interest rates and cost of living continue to pressure consumer spending. WA retail sales grew 3% y-o-y in September, spurred by record population growth driven by international and interstate migration.
• Approximately 10,000 sqm of new retail space was added in 3Q23, with the redevelopment at Busselton Central Shopping Centre completing in the period. There is new supply scheduled to complete in the near-term, due to higher cost of debt and construction costs.
• Net face rents held steady q-o-q across the majority of retail categories, with LFR seeing the largest rental growth in 3Q23, increasing 2.2% q-o-q and 5.6% y-o-y.
• Retail yields continue to expand from the lows in mid-2022 but at a slowing pace with limited transactional evidence. Yields at regional centres remained unchanged q-o-q, while sub-regional and neighbourhood centres saw yields expand 13bps q-o-q.
• Retail investment transaction volumes improved significantly in 3Q23, with c.$714 million in retail transactions. The largest transaction in 3Q23 was the sale of Midland Gate Shopping Centre for $465 million to PAG & Fawkner, representing a core capitalisation rate of 6.5%.