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Investment surge

DEREGULATED trading hours or no deregulated trading hours, investment in Western Australia’s retail property is surging on regardless.

Property trusts MCS Property and Macquarie Country Wide are currently acquiring shopping centres like there is no tomorrow and big money is being poured into new retail developments and refurbishments.

Over the past two years MCS and Countrywide have spent more than $86 million on shopping centre purchases.

Riding WA’s continuing buoyant retail figures retail property investors, including Centro Properties group, ING and Lewis Land are ploughing big dollars into shopping centres. 

More than 133,000 sqm of retail area will be developed or refurbished in the 2003-04 period.

Not included in the above figure are Woolworths plans for two new supermarkets, 10 supermarket refurbishments, a $7 million refurbishment and upgrade of two Big W stores in the same period. 

The company has also committed to opening two new Big W stores in the next two to three years, a capital investment of $20 million, and also plans to invest another $90 million in a distribution centre near Perth Airport.

This is all before large retailers’ holy grail of deregulated trading hours is implemented in the State.

One of the main arguments underpinning the deregulation push from the major retail chains and property groups is that WA’s current shopping regulation act discourages large retail investment groups from pumping more money into the State.

Milton Cockburn, executive director of the Shopping Centre Council of Australia, whose total WA membership owns around 55 per cent of the total shopping centre floor space in the State, said that he believed the current restricted trading hours were a disincentive to retail investment in WA.

Mr Cockburn said investing in shopping centres took significant capital investment, on average $250 million. Under WA’s current trading hours that investment sits idle for around 55 days a year.

He said that in other States shopping centres operated for approximately 365 days a year resulting in a far more efficient investment in comparison.

“If AMP, Westfield or Centro have a marginal decision to make of where to invest, do you look at WA where the investment sits idle for 55 days a year or on the east coast?” Mr Cockburn asked.

In the Woolworths submission to the Retail Hours Review new retail investments are promised if extended shopping hours are implemented.

In addition to its new supermarkets and refurbishments planned for the 2003-04 period, Woolworths has proposals for further new supermarkets, Big W and consumer electronics stores in new and expanding suburbs. 

The submission states that these stores are not yet commercially viable under current trading hours, however, if trading hours were extended several of these stores could be built and opened sooner than is currently scheduled. 

It is hard to gauge what the Woolworths investment windfall would be as the submission does not include details on just how many projects, how much they would be worth and just how soon they would be developed if the government were to deregulate retail hours.

Woolworths chief executive Roger Corbett has said it was likely that this additional investment would be stopped if deregulation did not go ahead.

“You can’t have it both ways… Sunday trading is a critical factor for the investment,” he said.

Not all industry pundits believe that deregulating trading hours will increase retail investment in this state given the current flurry of investment in retail property in WA.

Jones Lang Lasalle regional manager of retail Steve Long said big trusts were currently buying up whatever good quality property they could find, despite the investment being closed 55 days a year in the WA market.

Mr Long said east coast investors were looking at retail property in the west more seriously now and could see the opportunities to buy and redevelop.

“Investor sentiment does not appear to be affected by the trading hours debate,” he said.

Driven by the dearth of good stock on the market, MCS and Macquarie Countrywide have begun to buy into property trusts to increase their exposure to retail property, Mr Long told WA Business News.

He said rather than retail hours, property investment trusts tended to look to population growth when determining where to invest, develop or redevelop.

“In certain pockets of WA there is healthy growth, the growth in Wanneroo is 8 per cent and these guys are always looking for new sites,” Mr Long said.

“I don’t think deregulation is going to be a catalyst for any new investment.”

PrimeWest director Jim Litis said an abundance of superannuation money was driving the current growth in retail property investment.

He said the aggressive acquisition of shopping centres was not being driven by well thought out investment but rather the need to place superannuation money somewhere.

Mr Litis said trusts such as MCS and Macquaries only bought where there was a Coles or Woolworths as an anchor tenant.

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