Shopping Centre Transactions Remained Weak in October

Even with the lifting on some domestic travel restrictions and the opening up of Victoria, economic and financial uncertainty continue to weigh on the retail sector. In particular, it is unclear how consumer spending will react to the paring back of personal and business subsidies, how some retail businesses will survive, let alone their willingness or ability to pay rent. To this can be added the reduction in footfall being experienced in city centres which is crimping trade in inner city stores.

As a consequence, making accurate valuations remains very difficult, if not impossible, in many cases, leading to a dearth of transactions.  

The Data App (TDA) estimates the value of shopping centre transactions across Australia in the three months to September was down 62% on a year earlier; to their lowest level, in value terms, for close to ten years.

The number of shopping centres transacted, while marginally up on last month, also remains well down on a year ago. In the three months to October, TDA estimate the number of transactions averaged a shade over five; down 45% on a year earlier. Whilst only based on a small sample, cap rates continue to rise which, against the backdrop of falling real yields, means commercial retail assets provide increasingly attractive returns.