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News release


Jones Lang LaSalle Report: Shopping Centre Investment Review and Outlook

Liquid market conditions remain highly conducive to major transaction activity

​AUSTRALIA, 11 February 2014 – Jones Lang LaSalle’s annual Shopping Centre Investment Review and Outlook 2014 shows record levels of activity reached in 2013 are set to continue in 2014.

Key highlights from the report:

AUD 7.1 billion of retail investment stock traded in 2013, the highest figure ever recorded for the Australian market;

Volumes were 84% above the long-term 15-year average of AUD 3.8 billion and builds on the previous high of AUD 6.5 billion, recorded in 2012;

A-REITs continue to be the key driver of transactions on the sell side; while a combination of unlisted funds, domestic superannuation funds and offshore investors are the major drivers of activity on the buy side;

Volumes for three of the five traditional retail formats hit record highs in 2013: sub-regional (AUD 1.8 billion), neighbourhood (AUD 1.2 billion) and bulky goods (AUD 1.1 billion) reflecting the ‘capital cascading effect’ from major assets into portfolios of smaller format shopping centres. 

Comments from Australian Head of Retail Investments, Simon Rooney:

“2013 was another record year for retail investment transactions. The trend of capital partnering remained the most prominent theme in the retail investment market with seven major part-share transactions in 2013 totalling AUD 2.5 billion, equivalent to 36% of all sales. 

“Another key trend which gained momentum was a capital cascading effect – whereby pent-up capital seeking core product began to move up the risk curve, as a means for investors to deploy funds.”

“This cascading effect was a key driver of activity in the sub-regional and neighbourhood sectors, particularly where major institutional investors could acquire large portfolios.”

“2014 is going to be another highly active year with significant and on-going market liquidity providing a conducive environment for strong levels of retail transaction activity to continue.” 

“The volume of capital seeking retail investments is significant, and currently exceeds the level of stock available. We are managing over AUD 10 billion of investor mandates from domestic and offshore sources, approximately half of which are seeking a passive position.”

“This side-line capital will create joint venture opportunities for major landlords to re-weight their portfolios, diversify their exposure to different retail formats, reinvest back into existing assets or fund new acquisitions,” said Mr Rooney.

Comments from Director, Research and Consulting, Andrew Quillfeldt:

“Despite the high levels of investment activity and growing competition over the past two years, yields have remained relatively stable, with just some evidence of moderate yield compression for the best quality assets. Investors therefore remain selective, and are still conservatively pricing risk in most cases.”

“A recovery in discretionary retail spending which emerged in the second half of 2013 will support an improvement in asset level fundamentals. This is likely to fuel further confidence and investment into the retail sector by both domestic and offshore groups,” said Mr Quillfeldt.