Perth

Investor demand builds confidence in WA retail market

Offshore investor interest in Western Australia’s retail market is expected to intensify in 2018, building on the $48 million worth of assets transacted in 2017.

07 Feb 2018

Offshore investor interest in Western Australia’s retail market is expected to intensify in 2018, building on the $48 million worth of assets transacted in 2017.

According to CBRE Research, $458 million worth of Western Australian retail assets changed hands in 2017, up from $398 in 2016. Highlight transactions include a 50% share in Vicinity Centre’s Rockingham Centre to AMP Capital for $305 million at a yield of 5.86%. 

CBRE’s Richard Cash said demand for large format centres was strong in 2017, with buyers attracted to the secure cash flow generated from long lease terms to predominantly national tenants.  The underlying land value of large format centres provides for longer term development upside given many centre’s are located on key thoroughfares. 

In 2017, six large format retail assets change hands for $62.90 million – averaging a per square metre rate of $2,791 and yield of 7.51%. 

Neighbourhood shopping centres experienced a drop-in transaction volumes from $210 million in 2016 to $35 million in 2017, albeit this is attributed to the lack of available stock rather than weaker investment appetite. 

“Neighbourhood centres remain more defensive in nature against online retail and are therefore extremely sought after in the market, particularly given a large proportion of their income is generated by major anchor tenants such as Woolworths or Coles on long term leases,” Mr Cash said.  

“While supply of these assets was limited in 2017, the strengthening market and state economy will provide more confidence for shopping centre owners to test the current demand.”

CBRE’s Anthony Del Borrello said Western Australia’s retail market would continue to gain momentum in 2018, fuelled by an upturn in offshore investor interest. 

“Offshore investors - mainly made up of Singaporean investors - accounted for 28% of retail purchases in Western Australia in 2017. We expect to see this flow of capital continue given the attractive yield spread, stabilisation of the Western Australian economy and Asia’s relative proximity to Perth.” 
 
For Australian/international news or global stories, follow us on Twitter: @cbreaustralia

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 (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

Disclaimer:

Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at https://www.cbre.com.