WA poised for retail-led rebound

There is still life in Western Australia’s ailing commercial property market, particularly in retail, experts and agents say.

Savills state director of retail investments and services Chris Ireland says investment fundamentals will see Western Australia weather the current mining downturn and reemerge as a target destination for both local and foreign investors.

“As demand for property in the east coast markets drives increasingly low yields, and correspondingly high prices, investors will turn to WA, and those who do so first are those who stand to profit most,” Ireland says.

Ireland points to the state’s blooming retail property market as a sign things are already on the improve.

The potential for Chinese investment in WA is enormous

Savills has recorded more than $752 million worth of retail property deals worth more than $1 million in the year to June, almost double the $403.65 million recorded the previous year, and also up on the $690 million five-year average.

The agency traded 42 retail properties in the last financial year, up 25 on the previous year.

Woodlake Village Shopping Centre, near Perth, recently hit the market.

Sub-regional retail centres made up almost half of Western Australia’s retail sales in the 12 months to June, while neighbourhood centre sales totalled $178 million.

“Of course retail, and especially neighbourhood centre retail, is regarded as a defensive investment, the sort of investment that continues to deliver in a downturn and that has been important in the upward sales trend we have seen over the last 12 months,” Ireland says.

“But these investors also have an eye to the future in terms of considering location including local population growth and local and state government infrastructure initiatives, which will deliver long after the downturn ends.”

Investors will turn to WA, and those who do so first are those who stand to profit most

Savills head of research Tony Crabb says Western Australia is already on the radar of Chinese investors.

“The potential for Chinese investment in WA is enormous,” he says.

“There are currently around 150 insurance firms in China, with assets under management of approximately US$2 trillion. These organisations are interested in diversification, among other things, and it’s not drawing too long a bow to suggest that some of that investment is going to end up in WA.

“WA has a very good record of providing the sort of stable economic and political climate that inspires confidence in investors and developers.”