Regional shopping centres still a hit with investors
Regional shopping centres offering premium services and local neighbourhood complexes that are very convenient are dominating asset trading this year.
The top end of the market is flourishing. A deal is imminent by the billionaire Alter family to sell stakes in the Werribee Plaza and Pacific Epping shopping centres in Melbourne, worth close to $1 billion.
QIC Global Real Estate has been in due diligence to buy the interest off-market via Colliers International and the price could reflect a yield in the low 4% range.
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In Sydney, US property giant Blackstone is also poised to double its money on its Top Ryde City Shopping Centre investment, putting the site on the block for $700 million via JLL.
But a number of malls “stuck in the middle” and poorly positioned for the onslaught of online retailing are either not selling or trading at close to book value.
Much of the action this year has been in neighbourhood centres, where a series of deals with gravity-defying yields have been struck.
In one of the latest plays, a Melbourne investor has paid $36.5 million for Bellarine Village Shopping Centre in Newcomb, Victoria.
CBRE national director investments, Mark Wizel, who handled the sale with colleagues Justin Dowers and Joseph Du Rieu, says demand for well-positioned assets with development and rental upside has not declined, despite talk of an investment hiatus.
“If anything, there has been a new intensity in interest as investors focus not simply on secure lease covenants and rental returns but on genuine upside provided by prime city centre sites,” he said, noting many also held development potential.
Wizel says retail is historically seen as a safe, defensive investment as centres are occupied by tenants that depend on non-discretionary spending.
But, he said, the potential to add a mixed-use development in town centres adds an attractive “string to their bow”.
Some landlords, including Charter Hall and Stockland, have seen this potential in their sites and are holding them.
The Bellarine centre spans 10,443sqm and is anchored by Woolworths and Dan Murphys, and includes 16 specialty retailers.
It sits on a 2.3ha site and sold on a passing yield of 5.8%, in keeping with recent sales, including a Melbourne investor that bought Maroondah Village on a 4.6% yield.
Developer Colin DeLutis also bought The Village in Bacchus Marsh from Abacus Property Group for $61.65m.
The depth of this market is about to be tested by Woolworths, which has put a $150 million-plus portfolio of neighbourhood assets on the block.
This article originally appeared on www.theaustralian.com.au/property.
