QLD INVESTORS SCALE RISK CURVE IN RETAIL
Written on the 20 October 2015
RECENT development deals in Queensland have shown a new demand for suburban retail opportunities.
A trio of sales totalling more than $30 million have been finalised in recent weeks as investors demonstrate an increasing willingness to move up the risk curve.
One of the most recent transactions had Engage Capital, in partnership with Evans Long, reaching an agreement to sell the Augusta Village shopping centre in Ipswich valued at $10.8 million.
It was the second deal in as many weeks for the partnership following an $18 million fund through deal on the Calliope Shopping Centre in far north Queensland.
CBRE's Michael Hedger says these deals are indicative of a trend where investors are diving into the retail sphere.
"We are finding with the continued increase in competition in the neighbourhood shopping centre market investors are moving up the risk curve and exploring fund through deals and development opportunities," says Hedger.
The Augusta deal involved the sale of a development site in the master-planned Springfield growth corridor.
The purchaser exchanged unconditional contracts the night before close of campaign at a price which reflects a yield on completion of 7.42 per cent.
IGA has signed a 15-year lease to anchor the Augusta centre, which is being developed on Leon Capra Drive in Augustine Heights.
CBRE's Nick Willis says the deal will be great for Australian investors and retailers.
"The centre offers a secure income stream from national and local retailers and appealed to investors looking for strong depreciation benefits and significant acquisition cost savings," says Willis.
The Engage Capital/Evans Long partnership recently finalised a similar deal for the Calliope Shopping Centre which will allow for a significant expansion of the existing anchor to become a full line, 2,422sqm supermarket on a brand new 20-year lease to Drakes Super IGA.
In a third transaction, CBRE has sold a 17,140sqm development site in Caboolture to a private investor for $3 million.
While there is no pre-commitment from an anchor supermarket at the site, Willis says strong interest was expected from major supermarket operators.
"Continued low interest rates and increasing offshore investment in the Australian real estate market, underpinned by the secure annuity style returns offered by retail investments, ensure a sustainable and positive growth environment for neighbourhood shopping centres," says Willis.