Tactical disposals forecast in retail property sector
Australia's retail property market is primed for "another year of elevated trading of assets in 2016", JLL reports.
In its Australian Shopping Centre Investment Review and Outlook, the property group said the sector's stable market fundamentals in comparison to other property sectors made it attractive to investor.
JLL head of retail investment Australasia, Simon Rooney, said the wide variation in individual shopping centre performance was likely to be a motivating factor existing owners to sell up, they were likely to redeploy capital raised through sale for other acquisitions.
Rooney added that offshore investors were likely to drive the majority of transactions in the sector over the next 12 months, as they seek to build their exposure to the Australian market.
"Investors continue to exhibit a high capacity and willingness to engage in major retail acquisitions, while at the same time re-engineering their portfolios with tactical asset disposals," he said.
"These conditions will be ideal for another year of elevated trading of assets in 2016.
"Active managers of retail assets with strong management capability and development expertise will continue to take advantage of the ideal market conditions to dispose of mature, stabilised, core assets in order to expand and upgrade existing assets within their portfolio, a theme which has continued over the past three years.
"Demand will again be led by offshore investors and wholesale funds seeking scale and low volatility.
"Focus is likely to shift in 2016 to assets that can deliver the highest potential for income growth in order to drive values and returns, given the compression of yields that has occurred in this cycle."
AUTHOR
Nicholas O'Donoghue
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