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December 14, 2017

The largest single-asset retail transaction ever recorded in Australia has taken place in Brisbane with the sale of Indooroopilly Shopping Centre.

AMP Capital Shopping Centre Fund and AMP Capital Diversified Property Fund each acquired a 25 percent stake in the super-regional shopping centre, along with management rights, in a deal worth more than $800 million. The asset was offered for sale by Eureka – Real Assets, acting as investment manager for Commonwealth Superannuation Corporation. The sale brings the total retail investment in the market over the past month to AU$1.1 billion following the sale of a 50 percent stake in Rockingham Shopping Centre.

Simon Rooney, JLL’s Head of Retail Investments for Australasia, said investors around the world are focussing their attentions on major shopping centres which dominate the surrounding trade area and offer customers an all-encompassing retail offering. “Given the accelerated rate of change in global retail trends at present, investors are positioning their portfolios towards highly resilient assets which can outperform by delivering solid risk-adjusted returns,” he explained.

The opportunity to gain management rights added a particular attraction for buyers looking to expand their investment platform as did the opportunity to capitalise on mixed-use development opportunities on the site, Rooney said.

The sale comes just two months after the country’s office sector saw a similar record broken, in what has been a strong year for Australia’s commercial property sector. The single biggest office deal in the country’s history was recorded in Sydney with the sale of a stake in mixed-use development, Wynyard Place.

A growing trend

The recent transactions highlight an increased prevalence for joint venture acquisitions among Australia’s domestic investors with the retail sector, in particular, witnessing momentum. A number of major assets have recently been offered for sale on a joint-venture basis, including Rockingham Shopping Centre offered on a 50 percent basis, sold to AMP for over AU$300 million. Singapore’s GIC and Australian-based Vicinity Centres also entered into an AU$1.1 billion swap transaction for a 50 percent interest in three Sydney CBD assets with management rights, for a 49 percent share in Sydney centre, Chatswood Chase.

As the country’s retail and office sectors continue to go from strength to strength, trends such as flexible working and e-commerce continue to blur the lines with mixed-use assets becoming increasingly popular as investors look to capitalise on both asset-types. Earlier in the year, one of the country’s largest Real Estate Investment Trusts revealed a further AU$1 billion commitment to Sydney with the acquisition of two flagship mixed-use assets in as many days; Sydney’s renowned CBD office and retail complex, the MLC Centre, for AU$722.5 million and 100 Harris Street, Pyrmont for AU$327.5 million.

While this is good news for some, new technologies are forcing the market to adapt and evolve – and none more so than retail, as landlords start to rethink their strategies to accommodate e-commerce. Rooney points to an increasing focus on ‘place-making’ as an example, used to transform centres into shopping and entertainment destinations, improving customer experience and ultimately footfall.

While Australia’s retail sector is set to continue to attract strong demand from buyers in 2018, Rooney adds that strategies that help to increase the resilience of an asset such as place-making will play a key role in future-proofing buyer demand.

Click to read more about retail investment 

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Simon Rooney

Head of Retail Investment, Australasia, JLL

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