Retail centre investors are seeing returns bounce back to 2011 highs on the back of growing household goods sales, research reveals.
Data from Colliers International found that Australian commercial property had continued to deliver “favourable returns” compared with global markets, with neighbourhood centres providing particularly strong returns.
“According to Investment Property Databank, over the year to December 2014, Australian retail property returned 10.7 per cent, composed of 6.7 per cent income growth and 3.8 per cent capital growth,” Colliers reported.
“Returns for the retail sector are at their highest level since June 2011 and have been boosted by strong capital growth; while income growth remains broadly unchanged.
“Neighbourhood centres provided the highest return over the 12 months to December 2014 at 14.7 per cent – outperforming all other property types and sectors.
“Returns from neighbourhood centres are now at their greatest levels since September 2007.”
Within the retail sector, Colliers reported that hardware and gardening centres had recorded growth of 10.1 per cent in the year to March 2015, while electronics retailers recorded 8.8 per cent growth.
“The strong growth across the sector has been driven by rising house prices and consolidated by a lift in housing supply and transactions, and is also reflected in the strong recent performance of hardware retailer, Bunnings,” Colliers reported.
“Household goods sales volume growth has also been strong, rising 11.3 per cent over 2014. This was the strongest annual growth rate for the sector in over 10 years.”
