Neighbourhood shopping centre deals down sharply in year to June 2016: Savills
Neighbourhood shopping centre deals across Australia were recorded at $1.2 billion for the 12 months to June 2016, down from $2.6 billion in the previous year, according to recent research by Savills.
A neighbourhood shopping centre is generally defined in the industry as a local shopping centre comprising a supermarket and up to 35 specialty shops. The total gross lettable area of retail floorspace will typically be less than 10,000 square metres.
The sales figure was also own on the five-year average of $1.4 billion.
In the year to June 2016, 56 neighbourhood shopping centres were sold against 91 the previous year and this is commensurate with the five-year average of 60 sales per annum.
There are several factors at work in the capital markets which are having an impact on asset prices.
First, there is an abundance of debt and equity available to purchase prime commercial assets on current metrics; second, the pricing of debt and equity domestically, $500 and especially overseas, continues to fall; third, investment fundamentals are sound with no oversupply, little vacancy and good rental growth; and, finally, catchment area fundamentals remain appealing with strong population growth, low unemployment and stable Australian Retail to rising household incomes.
Institutions remained active in the investment market for the 12 months ended June 2016, purchasing 39 percent of all neighbourhood shopping centres sold.
Private investors continue to pursue neighbourhood shopping but are now being outpriced by institutions. Also of particular note is the emergence of foreign investors purchasing 29 percent of neighbourhood shopping centres sold.
