05/09/2006 - 22:00

Retail cycle turns up $352m

05/09/2006 - 22:00

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Western Australia’s retail building cycle is tipped to peak at $352 million in value within 12 months as two major new developments get under way.

Retail cycle turns up $352m

Western Australia’s retail building cycle is tipped to peak at $352 million in value within 12 months as two major new developments get under way.

BIS Shrapnel says the $350 million redevelopment of the Claremont Town Centre by Hawaiian Group, and the 29,000 square metre extension to Lakeside Joondalup Shopping Centre by ING Property will add to an already strong market.

In its latest property market report released by LJ Hooker Commercial, BIS Shrapnel says retail commencements have remained solid in 2005-06, increasing by 6 per cent to $346 million, the second highest level of activity in WA to date.

Two major projects have underpinned this result – the $80 million extension to the ING Property-owned Armadale Shopping City, and the commencement of the $140 million retail component of Century City at 100 St Georges Terrace by Pivot Group and the Industry Superannuation Property Trust.

The Armadale Shopping City will increase from 19,800sq m to 31,500sq m, anchored by a Target store to open in mid 2007.

Also under construction, the retail component of Century City will comprise over 15,000sq m of space over three levels, including a 2,500sq m Woolworths Supermarket facing Hay Street.

Despite a forecast drop-off in building activity in 2007-08 and 2008-09, the report says the annual level of commencements between 2007 and 2011 will be over $300 million, about one third higher than the current five-year average.

Senior property analyst Maria Lee said WA should experience a down-turn of between 20 and 25 per cent in retail commencements between 2007 and 2009, before rising again.

“Bulky goods centres will be particularly affected because when the downturn comes, there will be slower growth in consumer spending,” she said.

Retail building is expected to recover by 3 per cent in 2009-10 and by a further 7 per cent in 2010-11.

Ms Lee said that, in the longer run, WA should expect to grow ahead of the national average, underpinned by sustained population growth and upgrading of bulky goods centres.

“There is quite a high provision of bulky good space in Perth, but it’s of a different type to that found in the eastern states,” Ms Lee told WA Business News.

“Developers are looking at opportunities to remodel some of the centres in more of an enclosed shopping centre style, with an additional storey, greater amenity and higher finish.”

In its report, BIS Shrapnel says the state is likely to suffer a period of slower retail turnover once the mining boom slows, potentially from 2007-2008.

Retail turnover is forecast to slow to around 1.6 per cent in 2007-08, and may slip to 1.5 per cent in 2008-09 before strengthening once more at the end of the decade, the report says.

In the meantime, WA retailers should be forgiven for thinking Christmas has come in July, with shoppers racking up sales of $1.91 billion for the month, a $29.9 million jump on the previous month.

The latest Australian Bureau of Statistics data released this week shows WA’s retail trend strengthening over the year to July, particularly for household goods, hospitality and services, department store and recreational good retailing.

Unemployment of 3.1 per cent, strong wages growth and sustained population inflows have all contributed to a retail turnover growth of 4.6 per cent in 2005-06, which is more than twice the national average.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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