With tighter mobility restrictions only slowly being lifted in Victoria, the impact of Covid-19 has continued to weigh heavily on both the commercial retail sector and the wider economy in general. So, with restraints on physical movements coupled with the health incentive to stay at home, on-line shopping has continued to fill the void.
Consequently, in some areas of the country it has not been possible to market assets, while the temporary closure or shutdown of some stores has made valuations virtually impossible, thereby crimping transaction activity. This has meant transactions are significantly down on a year earlier, but have improved marginally from the previous month.
The Data App (TDA) estimates the value of shopping centre sales across Australia in the three months to September are 47% down on a year earlier, averaging a shade over $200m. This compares to a decline, on the same basis, of 67% in August.
The number of shopping centres changing hands is similarly well down on a year ago. TDA estimate the number of transactions in the three months to September averaged a shade under six. Whilst this number is well down on a year ago (45%), it is off the lows posted in August. Cap rates are rising sharply which, against the backdrop of falling real yields, makes commercial retail assets an increasingly attractive investment.
