10/01/2006 - 21:00

Industrial, retail stock scarce

10/01/2006 - 21:00

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Much of the decline in value of retail and industrial sales last year can be attributed to a lack of stock rather than a slowing of the markets.

Much of the decline in value of retail and industrial sales last year can be attributed to a lack of stock rather than a slowing of the markets.

Retail transactions totalled $353 million (down from $437 million in 2004) and industrial sales, with a value over $3 million, $155 million (down from $165 million).

Tightly held stock in both sectors resulted in several large off-market transactions, including moves by the owners of Rockingham City and Southlands Shopping Centre to increase their stakes in the assets.

Colonial First State Property paid $43.7 million for a 20.8 per cent stake in the Rockingham City Shopping Centre, and Becton Investment Management paid $37 million to buy out its 50 per cent partner in Southlands.

Boutique funds management group EG Property Group made two of the top three retail purchases for the year, spending $38.6 million on the former Myer Megamart building on Beaufort Street, and $38 million for the Woolstores Shopping Centre in Fremantle.

EG, a Sydney-based specialist property funds management group with funds under management close to $250 million, was established several years ago by Michael Easson, a former NSW Labor Council secretary, former Macquarie Bank executive Adam Geha and his brother, Shane.

Woolstores was the only major shopping centre to sell in 2005 based on a public, open market sales campaign.

Listed property giant Mirvac spent $32 million acquiring the Kwinana Hub Shopping Centre as the first Western Australian asset into its commercial investment portfolio, which is valued at more than $3 billion, showing a confidence in the WA market.

In November, Mirvac’s director of property acquisition and agency services, Andrew Butler, told WA Business News that Mirvac was interested in the WA commercial market, given the climate of the sector.

“It is all good news coming out of Perth, which has not happened for a long time,” he said.

“The market has really turned in the last six months, and I’m sure Mirvac is one of many groups, trusts and super funds looking at commercial property in WA.”

The next largest retail sales for the year were well down in size and price of assets, with wealthy individuals and their private companies getting in on the action.

Fashion doyen Wayne Teo sold his trendy The Colonnade in Subiaco to the privately owned Hawaiian Group for $15.25 million, adding to its existing retail assets Carillon City and Claremont Arcade (both owned in joint ownership with Multiplex).

It is understood that Hawaiian is considering converting the first floor of the upmarket shopping centre into office space.

The John Poynton-backed Linc Property, run by former Adam Lisle (former Poynton & Partners partner) and brother, Ben, bought two development sites in Midland for $12 million and $11.7 million respectively.

Perth developer Nigel Satterley is a joint venture partner with Linc on the $12 million site, located on the Great Western Highway.

The sale price of $275 a square metre was a significant increase on the $154/sq m achieved by an adjacent property that sold in mid 2003, and it is expected the syndicate will spend $18 million to $20 million developing the site.

Developer come funds manager Becton, which listed in 2005, was the buyer in the year’s two biggest industrial sales, the Spearwood Distribution Park for $24.5 million and 245 Balcatta Road, Balcatta for $14.5 million.

Listed WA property group Aspen also spent on two industrial assets, a $10.5 million site in Kewdale, and an $8.44 million site in Henderson.

Savills divisional director of industrial sales Max Jones said that, although sales were down in the industrial sector during 2005, this was due to a reluctance of owners to party with stock as opposed to a lack of demand, which he said remained strong.

“While sales volumes were low, prime industrial yields have tightened around 15 basis points during the year and now range from 8 per cent to 8.75 per cent for Perth’s main precincts, and astute investors are seriously looking at yields below 8 per cent to secure stock,” Mr Jones said.

After several sluggish years of rental growth, Savills research shows a jump of approximately 16 per cent in prime rents over the last year, bolstering the sector.

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