News release

Retail investor Confidence Returns in Q4

The outlook for the 2024 Victoria retail investment market is promising, with a substantial volume of deals completed in the final quarter of 2023

February 22, 2024

Stuart Taylor

+61 428 000 000

The outlook for the 2024 Victoria retail investment market is promising, with a substantial volume of deals completed in the final quarter of 2023 and robust bidding activity indicating a return of buyer confidence said JLL Senior Director of Retail Investments, Stuart Taylor.

“Transaction activity is expected to remain consistent in the coming year, with cautious yet active buyers pursuing opportunities with adequate returns or potential for value enhancement through active management or development,” he said.

JLL expects private capital will continue to dominate transactions, while institutional owners are anticipated to be net sellers. This presents attractive opportunities for active buyers as owners look to refine their portfolios in a market that highly values asset quality.

Victoria's retail real estate market rebounded strongly in the last quarter of 2023, with a surge in transaction activity signalling the return of investor confidence.

JLL Research found that the final quarter of sales nationally accounted for 40% of all retail deals throughout the year, highlighting a positive trend for the market for 2024.

JLL Research 2023 figures recorded a total of $1.72 billion worth of retail assets changed hands in Victoria, representing a significant 48% increase compared to 2022 volumes and in line with the 10-year average.

“This was despite a cautious start to the year as market participants focused on price discovery and recalibration amid rising cash rates, values adjusted orderly as the year progressed. The weighted average yield expanded from 5.96% in 2022 to 6.22%, leading to increased deal volumes in the latter part of the year,” Taylor said.

"Syndicators have been the major buyers in the retail space, and they've tended to need to hit an 8% distribution yield for deals to make sense. When it's below an 8% distribution yield, syndicators can still create strong equity returns if they have good debt levels,” said Andrew Quillfeldt, JLL Head of Capital Markets Research.

Sub-Regional Liquidity Emerges with Attractive Yields

In 2023, Sub-Regional transaction activity experienced a notable uptick in Victoria despite a decline at the national level. Sales volume in this sub-sector increased by 60%, making it the strongest year since 2018. This trend suggests that investors are drawn to cities with higher growth potential, driven by population growth and development opportunities.

Investors are attracted to Sub-Regional assets due to their relatively attractive yields and valuable land holdings, offering avenues for value creation. Syndicator groups emerged as the dominant buyer type, accounting for 52% of total deals, while institutional investors represented just 9% of transactions last year. The appealing metrics and ownership profile's motivation to refine portfolios and manage debt are expected to keep Sub-Regional activity elevated in 2024.

Victorian Neighbourhood Shopping Centre Transactions Rebound

The transacting activity for Victorian Neighbourhood Shopping Centres showed significant improvement in 2023, with a 158% increase in transactions compared to the record low of 2022. However, the number of transactions remains 53% lower compared to the highs of 2021.

Among the centres that transacted, 75% were located in Metropolitan Melbourne, reflecting buyers' preference for prime locations. Only two centres, Torquay Village and Drouin Central, transacted in Regional Victoria.

“While buyers remain discerning in their selection of quality assets and locations, elevated activity is expected in this sector in 2024 as pricing adjustments occur and private capital demonstrates significant demand,” Taylor said.

Large Format Retail Centres Remain Attractive

The Victorian Large Format Retail Centre market experienced significant transactions in 2023, albeit with overall low deal volumes in this tightly held sub-sector. Multi-tenanted assets accounted for three transactions, representing a 21% increase in deal volume compared to 2022.

Strategic metropolitan land holdings with strong underlying land value and low site coverage characterised these transactions. Examples include Epping Hub (Formerly HomeCo Epping), strategically located 17km from the CBD on a 9.1 hectare landholding with low site coverage, and HomeCo Box Hill, attracting an offshore investor due to its large landholding in the sought-after eastern suburb.

“The market is expected to continue attracting new capital sources in 2024 as the underlying land value remains a key strategy to unlock total returns for active buyers,” Taylor said.

He said that while transaction volumes remain subdued in the large-format retail sector, there is significant demand from well-capitalized private investors.

“These buyers see this time in the cycle as an opportunity to secure prime assets that rarely become available for purchase from long-term holders," Taylor said.

About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.8 billion and operations in over 80 countries around the world, our more than 106,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit