February 16, 2024

Retail Revival: Australia’s Real Estate Shift


The macro drivers supporting retail values over the next 3-5 years include:

  1. Mismatched supply/demand from population growth, specifically in urban centres and growth boundaries;
  2. Higher construction costs, restricting new supply;
  3. Scarcity of suitable sites, as a result of large contiguous land holdings typically required for retail assets to be functional (parking, storage, loading, click and collect fulfilment, etc); and
  4. Non-discretionary retail (typically neighbourhood and sub-regional shopping centres) have remained attractive in a higher inflation environment with the ability to pass through rental increases linked to CPI.

We expect transaction volumes for retail to maintain 2023 momentum, with seven transactions in Australia totalling $650m currently in our investment pipeline. These potential senior secured loans are geographically spread (2 in QLD, 3 in WA, 1 in VIC and 1 in NSW) and meet our target metrics for specific locations, tenancy mix, high occupancy rate and suitable weighted average lease expiry and average debt to asset value attachment point of less than 65%.


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