Amazon ‘little danger to big malls’
The arrival of online shopping behemoth Amazon could hit some secondary shopping centres but the future of major malls in Australia remains bright, driven by the growing population, planning constraints and limited new supply, analysis by investment bank Moelis & Co. suggests.
Retail A-REITs have come under pressure as investors fear the worst with major mall owners trading at low points. Scentre Group and Vicinity Centres are among the groups investors have deserted.
But Moelis analyst Edward Day has joined the chorus of existing retailers who have argued that Australia’s strict planning regime and lack of population density are natural balances to Amazon.
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“In the few high density cities in Australia, any damage done to malls from online may be mitigated by alternative and better use opportunities,” he says.
But Day warns that large format retail centres are vulnerable to the “triple threat” of increased supply, a slowing housing market and growing online threat.
The Moelis analyst argues that new mall supply will moderate significantly, driven by the subdued rollout plans of major tenants. Instead, he says, shopping centre development would be focused on growth corridors and urban infill and mixed-use projects in major cities.
At the smaller end, he says that the demand for physical supermarkets should still exceed current supply even if online sales doubled in the next five years.
“This outcome more than justifies existing supermarket footprints and new sites will be heavily scrutinised by the retailers,” he says.
The spaces taken up by department stores will also contract as they are replaced by mini-majors and specialty shops.
This article originally appeared on www.theaustralian.com.au/property.
