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News release


Homemaker investment surge continues, reaching record levels following the sale of Home HQ Artarmon for $72.5 million

SYDNEY, 30 SEPTEMBER 2013 – Acting on behalf of Charter Hall, Simon Rooney and Luke Harris of Jones Lang LaSalle have exclusively negotiated the sale of Home HQ Artarmon for $72.5 million.

So far this year, there have been 18 transactions involving multi-unit bulky goods shopping centres, totalling $604 million. The top 10 sales are listed in Table 1.

Some of the biggest sales include Homemaker City Fortitude Valley (QLD) to Altis Property Partners for $103.2 million in July, Belrose Supa Centa for $88 million in August to BB Retail and Home HQ Nunawading for $48 million in June to Arkadia.

Australian Head of Retail Investments, Simon Rooney said, “We’ve seen record levels of activity in the homemaker sector over the past two years with over $1.2 billion trading since the start of 2012. The sale of Home Hub Hills in January 2012 kicked off a series of 34 homemaker centre sales, but it still remains the largest bulky goods transaction in Australian history at $178.5 million, transacted by Jones Lang LaSalle.

“There has been a major shift in the ownership profile of homemaker centres. The sector has been through a transition since 2008 and there has been a gradual transfer of ownership from institutions to private investors over this time.

“A-REITs continue to reduce their exposure to homemaker centres and have been substantial net sellers of approximately $588.2 million (purchases minus sales) since 2008 in order to recycle capital back into the refurbishment of their major core assets,” said Mr Rooney.

“Acquisitions to date have been predominantly led by a handful of specialist domestic private investors such as BB Retail Capital and Arkadia, but of late we have seen the entry of a number of opportunistic funds such as Altis and Primewest becoming active to capitalise on the wide yield spread to other retail formats.

“Yields in the bulky goods sector remain very high by historical standards and offer investors potentially very attractive returns for those willing to move up the risk curve and take a counter cyclical position.”

Jones Lang LaSalle Research shows yields for bulky goods centres currently range between 8.50% and 11.50% (as at June 2013) with mid-point of 9.60%, compared with the 10 year long term average of 8.78%. The research shows the outlook for a recovery in residential construction, a key driver of household goods retailing, is now becoming even more compelling. The official cash rate was cut to 2.50% in August 2013, and a number of forward indicators suggest a recovery in residential construction and an improvement in household goods spending.