Friday, November 8, 2024

Perth in focus in shopping centre buying spree

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And in April and May, there was an additional $19m in investment across two shopping centres – Collie Central, and Riverton shopping centre – the latter selling off market for $9m at a passing yield of 7.18%.

WA lures buyers with higher relative returns than Australia’s core east coast markets says Sean Flynn, senior director, capital markets – WA, JLL.

“Perth shoppers have the same needs as those in Sydney and Melbourne, the city has arguably more stringent planning controls, and the risks and benefits are comparable. Despite this, WA transacts at a noticeable yield differential, effectively delivering higher returns,” Flynn says.

The mid-point, or median, yield for neighbourhood shopping centres in Perth as of March this year was 7.00% compared to Sydney’s 6.38%, according to JLL research. This reflects a softening of 50 basis points (bps) year-on-year in Perth versus 63 bps in Sydney. Melbourne and Brisbane’s mid-point yield of 5.75% and 6.50% respectively reflects a softening of 12 bps and 37 bps over the same period.

Limited yield movement in Perth “reflects a market that doesn’t have as far to correct”, with values holding even amid interest rate pressures, explains Flynn.

One of the most eye-catching deals has been the sale of Whiteman Edge Shopping Centre in February. It was the largest and tightest-yielding neighbourhood shopping centre transaction in the state in two and a half years. The fully leased centre was bought by a South Australian investor for $39.1m at an annualised yield of 5.99%.

Woodvale Boulevard Shopping Centre, located in an affluent residential area where average household income is $121,446, 6.2% above the Western Australian average, was bought for $36.5m by a local syndicator. Eight formal offers were made for the mall, which shows the depth of appetite for well-located Perth metropolitan retail holdings.

Private wealth clamours

Encompassing high net-worth individuals, small partnerships, family offices and syndicates, private investors have accounted for 75% of neighbourhood shopping centre purchases in WA over the 12 months to March 2024, with an average deal size of $28.2m, according to JLL research.

The relatively low price point of neighbourhood shopping centres, which typically sell between $10m – $40m in WA, has seen this cohort dominate.

More recently, interstate and offshore interest has been noticeable amid the established fraternity of local seasoned private investors.

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