Current yields on retail property are between 5.5% - 9% depending on the location, lease term and tenant covenant. Compared to 3% - 4% in bank deposits, retail assets are looking attractive to property buyers.
Interest in retail property has been strong during the first half of 2009. Private property buyers and syndicates are confidently buying premium retail assets recognising that conditions are becoming increasingly favourable. Historically low interest rates, low bank deposit rates and improving confidence are acting as a catalyst for these property buyers to enter the market.
Many international property buyers have been monitoring the Australian market for a while now and are expected to become increasingly active with their acquisitions of Australian retail assets over the next 6 months.
There are several reasons that International property buyers are attracted to Australian Retail Property at present.
Retail is seen as a defensive asset in these volatile times so staple food businesses such as super markets are highly sought after.
The margin or spread between the cost of finance overseas and Australian retail yields has increased and is now very favourable.
Australia has good population growth & therefore demand for retail space.
There are a good number of quality retail assets on the market at present.
Australia has a high level of transparency and regulatory compliance which provides international property buyers with the confidence to invest off shore.
It is expected that the majority of transactions will occur in the $10m - $60m range over the next 12 months with neighbourhood and sub regional centres being sold.
For more information about how Prosper Group commercial buyers agents can assist you source a quality retail property please call us on 1300 664 373 or email enquiries@prospergroup.com.au
