MELBOURNE’S main retail shopping strips have defied the economic downturn. A joint report by the Australian Property Institute and agents Fitzroys has found yields and sales have remained firm and outperformed all other property investment sectors.
The API – Fitzroys study looked not only at Melbourne’s traditional shopping strips – Puckle St, Moonee Ponds; Burke Rd, Camberwell; Chapel St, South Yarra; Glenferrie Road, Malvern as well as other well located strip shopping centres around Melbourne metropolitan area.
The API – Fitzroys study found the current financial crisis facing Australia has not impacted the strip retail market whilst it had severely hit the commercial office and industrial markets, which are both experiencing a significant yield push out, particularly at an institutional level as high net worth individuals are re-entering the market and securing property at a discount to the prices achieved 18 months ago.
Fitzroys director David Bourke said back in the early 90s retail yields for strip retail blew out to as much as 8% however, the strength of the Melbourne retail strip centres have seen private investors over the past six months continue to buy at yields as low as 3% – 4%.
Bourke pointed to a recent sale in Malvern Road, Hawkesburn which fetched $1.95 million on a return of $68,000 per annum, representing a record yield of just 3.5%.
Other examples of strong sales was a Australia Post retail outlet in Puckle Street, Moonee Ponds, which sold for $4.08 million; whilst a South Yarra Post Office in Toorak Road sold for $6.01 million reflecting a passing yield of just 4.5%.
Bourke said the Melbourne retail market has become a tale of two cities between the institutional investors and private investors.
“Institutional investors are currently reviewing their portfolios and reducing borrowings and most do not have the funds to invest and are therefore mostly non-existent in the investment market whilst private investors have come to the fore and continue to be actively competing for well located investments that are presented to the market.
“There is a lot of wealth out there prying on the strip retail sector,” Bourke added.
API (Vic) president Chris Plant said Melbourne’s quality retail investments are being snapped up as soon as they are being presented to the market.
“The problem that the retail market is facing is a scarcity of stock and this is borne out in the yields that investors are willing to pay.
“Private investors would spend as much as $5 million for the right retail investment in the right shopping strip,” he concluded.
API – Fitzroys Major Retail Sales Study first six months 2009
555 Malvern Road, Toorak – $1.950 million – 3.5%
513 Chapel Street, South Yarra – $2.931 million – VP
807 Glenferrie Road, Hawthorn – $1.415 million – VP
179 Glenferrie Road, Malvern – $1.530 million – 3.59%
109-111 Puckle Street, Moonee Ponds – $4.080 million – 4.5%
96 – 100 Toorak Road, South Yarra – $6.010 million – 4.5%
108 Bridge Road, Richmond – $1.850 million – 4.9%
151 Chapel Street Windsor – $1.300 million – VP
48 -56 Douglas Parade Williamstown – $3.975 million – 3.8%
Australian Property Journal
