Offshore buyers driving shopping centre transactions

Foreign investment in Australian shopping centres is climbing across the board, including in non-CBD markets.

Over the first half of 2016, offshore buyers accounted for 51 per cent of shopping centre transactions, according to CBRE’s latest Retail Marketview research report.

The report highlights the strong offshore demand currently being experienced for strategic retail investments, with CBRE senior research manager, Australia, Danny Lee saying foreign investment in Australian shopping centres is currently well above the levels witnessed in 2014 and 2015, where offshore groups accounted for 13 per cent and 14 per cent of transactions respectively.

“Foreign investment has more than doubled over the past 12 months, as testament to the ongoing buyer confidence in the retail sector,” Mr Lee said.

Mark Wizel, CBRE national director of retail investments, said foreign investors have typically focused on core CBD assets, but are increasingly venturing into non-CBD markets.

“This is primarily due to the lack of available stock currently on the market in prime CBD locations, which is driving investors to target alternative assets, including regional, sub-regional and neighbourhood shopping centres,” he explained.

This trend, according to CBRE, was exemplified in the last quarter with Vicinity’s $841 million divestment of four centres, three of which were acquired by American investment firm, Blackstone Group.

The report also showed a significant uptick in investment across the broader retail sector, with retail property investment transactions increasing significantly from $0.7 billion in Q1 to $3.1 billion in Q2 — 36 per cent of which were acquired by foreign groups.

“Australian retail is being viewed as a relatively secure investment for offshore purchasers, underpinned by consistent growth in retail trade, with a 3.5 per cent increase in Q2, increased tourism and comparatively stable economic conditions in the Australian market,” Mr Wizel said.

National regional, sun-regional and neighbourhood centre rents also experienced growth over the past 12 months, at 1.3 per cent, 0.8 per cent and 1.4 per cent respectively. CBRE said these rents are expected to continue to grow at a moderate rate over the next 12 months.

Offshore buyers driving shopping centre transactions
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