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Cushman & Wakefield Retail Investment Snapshot Q1 - 2017

People & Companies / Latest News

Australia

Apr 07 2017

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ECONOMY

The Australian economy grew by 1.1% in Q4 2016, following a contraction of 0.5% in the previous quarter. Australia’s growth was driven by recovery in mining exports, household consumption and public investment. Notwithstanding this, annual average growth of 2.5% still remains sub-trend. Growth continues to be driven by east coast states, particularly New South Wales and Victoria where service sector employment is strong. Queensland posted its fourth consecutive quarter of growth supported by ongoing improvement in housing and tourism. Interest rates remain unchanged at 1.50%.

RETAIL MARKET REVIEW

In December 2016, Moving Annual Turnover (MAT) grew 3.4%, though continued the downward trend from a peak of 5.7% in late 2014. Retail turnover growth has been limited by weak employment and income growth though consumer sentiment has bounced back to 99.6 reflecting a more positive attitude towards national economic growth.

INVESTMENT REVIEW

Retail investment remained robust in Q1 2017 with a total of $1.1bn, up 23% on the same period last year. Queensland proved the most attractive destination, accounting for 43% ($457m) of the national investment volume. In contrast, New South Wales and Victoria recorded $262m and $221m, both below respective longer-run averages, as limited available stock was on the market.

Foreign investment rebounded strongly in Q1 2017 to $533m, up from $297m in Q4 2016. Foreign investors were active across

different centre types and sizes. This was highlighted by German-based Deka Immobilien’s purchase of the Canberra Outlet Centre for $135.5m, with a further $160m committed to a Redbank Plains sub regional centre by Rockworth Capital Partners, and $87m into two neighbourhood centres. With a lack of activity in larger core retail assets, where yields are tighter, average transaction yields remained stable for the quarter at 6.3%.

OUTLOOK

Many of the trends evident in 2016, such as retail property’s relative value proposition and competition to secure assets, remain in place into 2017. However, we expect more stock to come to market as established owners sell non-core assets to recycle capital into existing assets. Equally, active traders are likely to dispose of assets to seek new opportunities. Not only will this bring increased liquidity, and support overall transaction volumes, but also provide opportunities for new market entrants all along the risk curve.

SOURCE: Press Release

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