The nation’s ‘retail recession’ may have been running for the best part of nine months yet property stakeholders remain undeterred. More than $700 million worth of sub-regional malls alone had been sold by mid-year, and now Ray White Group has launched its RWC Retail division dedicated solely to selling retail sites to investors across the country.
Commercial agent Lachlan O’Keefe, who will lead RWC Retail said the retail investment landscape had “witnessed an unprecedented surge in interest from individual investors in recent years”. “As more individuals seek to diversify their portfolios and explore alternative investment options, the need for specialised services tailored to their unique requirements becomes paramount,” he said. “We realised there was no better time to launch RWC and provide a dedicated team of retail property specialists.”
Forecasts from other major commercial property groups augur well for the retail sector. JLL, for one, expects retail to be this year’s most resilient asset class given asset re-pricing and yield decompression continuing across sectors. “From a valuation and pricing perspective, the retail sector continues to be increasingly attractive in comparison to other property sectors,” said JLL’s Head of Retail Investments Sam Hatcher.
The retail sector has also seen several transactions of note to private investors this year. One of the most significant was the $111 million sale of Woy Woy’s Deepwater Plaza on the NSW Central Coast to private property platform Raptis Investments in May. The sub-regional shopping mall was one of three sold by the Dexus corporation since January. Raptis Investments was founded in Adelaide by Greek immigrants and is now run by the family’s third generation. Their portfolio also contains the Ballina Fair mall as well as other properties in Queensland and Adelaide within different asset classes. CBRE’s Simon Rooney who brokered the deal said the sale reflected the shift by investors toward retail assets that relied heavily on non-discretionary spending and that also offered “genuine value-add opportunities”.
In early August Burgess Rawson agents brokered the $3.6 million sale of a site within the Idalia complex, one of Townsville’s fastest growing retail centres. Burgess Rawson agent Neville Smith said the cross-border investor interest in the block, currently home to a Pizza Hut, Red Rooster and a tobacconist, and the region’s retail sector at large had been “remarkable” this year. In July, another major sale took place in Townsville when southern investors spent $9.2 million on a centrally located retail investment comprising four drive-through convenience tenancies in separate buildings on 4388 square metres. Mr Smith said 110 inquiries were received on that centre during the pre-auction campaign.
This week Frasers Property Australia, a major developer of retail sites, received a permit for the first stage of another major retail precinct in western Melbourne. The 7200 sqm Mambourin Marketplace will eventually offer up to 25 specialty stores such as fresh food, grocers, cafes and restaurants, as well as a medical precinct and pharmacy. It is located within one of the country’s fastest growing local government areas where the population is expected to almost double by its scheduled 2027 completion.
Within the industry, some retailers are facing genuine struggles while many are simply riding the peaks and troughs caused by current economic uncertainties. For instance, leading furniture retailer Nick Scali finished the 2023 financial year strongly with sales orders up 4.5 per cent on June 2022 to hit $51.5 million. In July however orders came in at $39.7million – 8.1 per cent lower than those received in the corresponding period the year prior. “It is very volatile, so you have some really bad months where consumers are spooked by the higher interest rates and then you have a good month like we have seen in June and July,” said Nick Scali boss Anthony Scali.
Mosaic Brands is among major retailers coming out of doldrums. Chief executive Scott Evans recently announced the havoc of the previous two years was “in the rear view mirror” when results showed an expected swing back to profitability. The fashion chain which owns brands such as Millers, Katies, Autograph, Noni B and Rivers, said in a recent trading update that there would be a $33 million turnaround on the prior financial year’s loss of $16 million. “Our customers are back in-store and staying online,” Mr Evans said in a statement.