For most new apartment buildings, the Owners Corporation starts life with little more than a bank account and the first quarterly strata levies.

At <a href="https://www.apartments.com.au/buildings/9-gay-street-castle-hill-9-gay-street-castle-hill-nsw-2154">9 Gay Street</a> in <a href="https://www.apartments.com.au/developments/castle-hill-nsw-2154">Castle Hill</a>, it starts with around $7 million in reserve.

It's an unusual legacy of what was once one of Sydney's highest-profile apartment remediation projects. When the development, originally known as Skyview and built by disgraced developer Top Place, came under scrutiny by then NSW Building Commissioner David Chandler, an $11 million remediation bond was negotiated to ensure any building defects could be fully rectified.

The building underwent an 18-month remediation program, during which around $4 million of that bond was spent bringing the building up to the standard it should have been in from the outset.

After extensive inspections, all active rectification orders have been lifted. What's more, around $7.2 million remains secured for the Owners Corporation for the next 15 years.

In a twist few would have predicted, what began as a significant concern for purchasers has left the building with something almost unheard of in the apartment market: a multi-million-dollar financial reserve from day one.

[smartcode_project:default project_id=147685 project_image_fid=359136]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Equitifund</a> Executive Chairman Greg Huxley said the structure offers buyers a level of certainty that is difficult to replicate.

"The $11 million bond established for the Skyview Castle Hill development represents exceptional value, providing genuine financial security for purchasers," Huxley said.

"Unlike a standard insurance policy, this bond consists of real funds held in trust for the Owners Corporation, offering a tangible layer of protection and added peace of mind."

The apartments themselves have been designed with a focus on practical, contemporary living. Interiors feature Smeg appliances, stone benchtops, tiled living areas, carpeted bedrooms, 2.7-metre ceilings, floor-to-ceiling glazing, and ducted heating and cooling throughout.

Residents also have access to a range of shared amenities, including two rooftop barbecue areas, a swimming pool, children's playgrounds, secure building access, storage cages, and visitor parking.

The location continues to be one of the project's strongest drawcards. Castle Hill Metro Station sits virtually on the doorstep, providing direct connections across Sydney's expanding Metro network, while Castle Towers offers extensive retail, dining, entertainment, and service amenities within walking distance.

[smartcode_project:default project_id=147685 project_image_fid=359127]

The building, now named after its location at 9 Gay Street, comprises a diverse mix of one-, two-, and three-bedroom apartments starting from just under $600,000.

Equitifund National Sales Director Ben Hamblett said demand in the Hills District continues to be driven by buyers seeking convenience and connectivity.

"Interest from both owner-occupiers and investors in Castle Hill remains exceptionally strong, with buyers consistently prioritising developments in close proximity to the Metro station and Castle Towers Shopping Centre," Hamblett said.

"There is a clear trend in the market, with purchasers seeking convenient access to transport and lifestyle amenities that support a seamless, low-maintenance way of living."

On top of the long-term protection afforded by the remaining $7.2 million bond, Equitifund is offering a limited-time stamp duty rebate on selected apartments.

Eligible purchasers can also secure finance options, including a 3.99 per cent two-year variable rate, loan-to-value ratios of up to 90 per cent, and interest-only lending options through EquitiCredit.

[smartcode_project_cta:default project_id=147685]

Joel Robinson

Why this Castle Hill apartment building starts with a $7 million advantage

For much of the past few years, conversations about Australia's property market have centred on the rapid growth seen in Sydney, Brisbane, Gold Coast, and Perth. <a href="https://www.apartments.com.au/developments/melbourne-vic-3004">Melbourne</a> has followed a different trajectory.

That relative underperformance is now encouraging some buyers to reassess the city, particularly those willing to look beyond short-term market movements and focus on quality property in established locations, along with the long-term growth prospects of a city expected to overtake Sydney as Australia’s most populous.

John Bekiaris, Research &amp; Market Insights at <a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a>, said Melbourne's current position is attracting increasingly sophisticated purchasers.

"Melbourne continues to present one of Australia's strongest long-term investment stories," Bekiaris says.

"While other capital cities have experienced stronger recent growth, that relative underperformance is exactly what's attracting sophisticated counter-cyclical investors."

[smartcode_project:default project_id=1979 project_image_fid=363268]

Equitifund isn't just commenting on Melbourne's property market, it's investing in it.

The Sydney-headquartered capital partner has taken over the remaining apartments at <a href="https://www.apartments.com.au/buildings/victoriana-melbourne-20-queens-road-melbourne-vic-3004">Victoriana</a>, the recently completed glass-encased development opposite Albert Park Lake in Melbourne's tightly held St Kilda Road precinct.

Designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> and built by <a href="https://www.apartments.com.au/builders/hickory">Hickory</a>, Victoriana places residents between one of Melbourne's most recognised parklands and the CBD, offering oversized two and three-bedroom apartments aimed at owner-occupiers seeking a genuine alternative to a traditional family home.

The development comprises 232 completed residences alongside a suite of resident amenities, including a 25-metre indoor swimming pool, gymnasium, landscaped entertaining areas, resident lounges, EV charging, secure basement parking and a concierge-style arrival experience.

[smartcode_project:default project_id=1979 project_image_fid=363229]

The apartments have been designed with owner-occupiers firmly in mind.&nbsp;Open-plan living and dining areas flow onto generous balconies framing views across Albert Park Lake, Fawkner Park, the Royal Botanic Gardens and the Melbourne skyline.

Kitchens feature Gaggenau appliances, stone benchtops and generous preparation space. Bedrooms include built-in robes, while bathrooms feature full-height textured tiling. Hardwood flooring and ducted air conditioning complete residences designed for long-term living.

Rothelowman's architecture takes its cues from the landscape opposite the site. Sweeping horizontal glazing references the movement of Albert Park Lake, while generous balconies and expansive glazing strengthen the connection between the apartments and the surrounding parklands. The result is a building designed to deliver the scale and amenity expected of luxury apartment living, while offering the larger floorplans increasingly sought by owner-occupiers.

[smartcode_project:default project_id=1979 project_image_fid=363284]

The location is one of Victoriana's defining characteristics. Positioned on Queens Road, residents are directly opposite Albert Park Lake and within easy reach of Fawkner Park, the Royal Botanic Gardens, South Melbourne, St Kilda Road and the CBD. With few comparable development opportunities remaining in the precinct, buyers are increasingly placing value on outlooks that are unlikely to be interrupted by future construction.

Greg Huxley, Founder of Equitifund, believes those qualities become even more valuable over time.

"Premium real estate has always rewarded buyers who take a long-term view," Huxley said.

"Victoriana represents the kind of asset that's increasingly difficult to recreate today, particularly in an established location like Queens Road."

He said rising construction costs are also changing the way buyers assess completed developments.

"When you combine an irreplaceable location with thoughtful architecture and premium finishes, you create something that becomes increasingly difficult to reproduce as construction costs continue to rise."

[smartcode_project:default project_id=1979 project_image_fid=363228]

According to National Sales Director Ben Hamblett, enquiry has been driven largely by Melbourne downsizers and buyers upgrading from smaller apartments.

"Interest in Victoriana continues to build, with strong buyer focus on the larger owner-occupier residences within the development," Hamblett says.

"Enquiry is increasingly driven by local buyers who recognise the rarity of what's on offer: park-facing apartments in an established neighbourhood where new development opportunities are becoming increasingly scarce. At Victoriana, the view is not just a feature; it's an appreciating asset in its own right."

He said interstate enquiry has also strengthened as buyers reassess Melbourne's position within the national property cycle.

"Melbourne currently stands as the most compelling entry point of any major Australian capital, and discerning buyers are beginning to recognise what those who move early always understand: the best opportunities are taken before the price rise confirms them."

[smartcode_project_cta:default project_id=1979]

Why now is the time to buy in Melbourne's premium apartment market

Developers and apartment buyers have a narrowing window of opportunity before Brisbane's Olympic infrastructure pipeline begins competing directly with residential construction, pushing up costs, tightening labour supply and making new projects increasingly difficult to deliver.

While Brisbane's apartment market continues to benefit from strong population growth and limited housing supply, industry research suggests the years leading up to 2027 could prove to be the most important period for developers looking to secure builders and buyers hoping to purchase before the next wave of price increases.

A new Colliers report, Brisbane 2032 Olympic and Paralympic Games: Creating Solutions, highlights the scale of the challenge. While thousands of new homes are planned across South East Queensland, the Brisbane Olympic Athletes Village alone will deliver more than 10,500 beds during the Games before being converted into around 1,750 to 2,000 apartments. Equivalent to almost two years of typical inner-city apartment supply, the project will also absorb a significant share of the construction workforce and building materials.

The broader construction pipeline paints an even clearer picture.

Construction Skills Queensland's Horizon 2032 report forecasts Queensland's annual construction pipeline will average $69 billion over the coming years before peaking at $75 billion in 2027-28. Demand for construction workers is expected to increase by 17 per cent to almost 150,000 people, with the industry facing an annual shortfall of around 19,000 workers that could blow out to as many as 35,000 during the peak construction period.

The Olympic venues, athletes village and supporting infrastructure will account for billions of dollars worth of work across South East Queensland through to 2032, creating intense competition for labour at a time when Australia's residential construction sector is already under pressure.

[smartcode_project:default project_id=150489 project_image_fid=373834]

Colliers Queensland Residential Director Andrew Scriven said the convergence of these projects is creating a clear window of opportunity for both developers and buyers.

"From 2027 onwards, the market will shift dramatically," Scriven said.

"Labour will increasingly be locked into government-led infrastructure and Olympic projects, which means private residential developments will face higher costs and tighter margins. The developers who move now are the ones most likely to get projects off the ground."

Scriven said the same dynamic would also affect buyers, with fewer apartment projects expected to launch once construction capacity tightens.

"If you're looking to change your lifestyle over the next five years, now is your window of opportunity to buy."

[smartcode_project:default project_id=150713 project_image_fid=373827]

Developers are already positioning themselves ahead of that window.

Following the success of Monarch at Toowong, Consolidated Properties is preparing to launch two new Brisbane apartment projects in the second half of 2026. They include <a href="https://www.apartments.com.au/new-apartments/gloriette-30-bedivere-street-yeerongpilly-qld-4105">Gloriette</a> at Yeerongpilly Green, a 25-storey tower within one of Brisbane's key Olympic precincts, and <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a>, a recently approved 25-storey riverfront development at 47 Skyring Terrace in Newstead.

Hutchinson Builders will deliver both projects, with early works already underway at Yeerongpilly and Newstead expected to commence later this year.

The timing comes as Brisbane's fundamentals continue to strengthen, with strong interstate migration, population growth and vacancy rates remaining below 1.5 per cent.

Colliers Queensland researcher Pragya Sharma said Greater Brisbane is forecast to require around 40,000 new apartments between 2021 and 2031.

"There's a real mismatch emerging between when housing is needed and when it will be feasible to build," Sharma said.

"As a result, the period leading up to 2027 presents a key window of opportunity for developers to secure approvals, funding and construction capacity, while buyers will have greater choice before supply constraints intensify."

Colliers research outlines a critical pre-2027 window to start residential projects before labour squeeze: now is the time to buy

Developers, buyers on watch in South East Queensland ahead of construction crunch: Colliers

It's taken less than nine months for developer Sherpa Property Group to sell out all 51 apartments in its <a href="https://www.apartments.com.au/new-apartments/flourish-oasis-palm-beach-7-9-sixth-avenue-palm-beach-qld-4221">Flourish Oasis</a> development in <a href="https://www.apartments.com.au/developments/palm-beach-qld-4221">Palm Beach</a>, over a year before its anticipated completion.

&nbsp;

Located at 7-9 Sixth Avenue, the $67 million development has resonated strongly with both local owner-occupiers and downsizers seeking high-quality apartments within walking distance of the beach, dining precincts and everyday amenities.

[smartcode_project:default project_id=151449 project_image_fid=357458]

Christie Leet, Founder of <a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Group</a>, said the sell-out reflected both the strength of the Palm Beach market and the success of Sherpa's community-first approach to development.

"The sell-out of Oasis is a fantastic outcome and reinforces the strong demand we're seeing for thoughtfully designed apartments in lifestyle locations," Leet said.

"From the outset, our vision was to create a development that genuinely enhanced the Palm Beach community while providing residents with exceptional homes and wellness-focused amenities.

"We've been incredibly encouraged by the level of local support throughout the campaign, 72.5 per cent of buyers are locals, with a significant proportion of purchasers choosing Oasis as their future home rather than an investment."

[smartcode_project:default project_id=151449 project_image_fid=357463]

Construction is now progressing following development approval, with trusted builder LPS Group delivering the project and completion anticipated in Q3 2027.

Oasis forms part of Sherpa Group's successful Flourish collection, which has become recognised for its focus on wellness, community and elevated coastal living.

[smartcode_project:default project_id=151449 project_image_fid=357469]

Residents will have private access to a rooftop amenity space featuring a pool, gym, sauna, steam room, hot and cold plunge pools, spa and barbecue facilities.

"The success of Oasis demonstrates that buyers continue to prioritise quality, location and lifestyle," Leet said.

"We are proud to have delivered a project that has resonated so strongly with the market and look forward to bringing Oasis to life for our future residents."

Sherpa recently launched <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a>, its third instalment of the Flourish brand in Palm Beach following Flourish Oasis and <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>.

[smartcode_project_cta:default project_id=151449]

Sherpa sells out Flourish Oasis in booming Palm Beach

Urban Property Group's <a href="https://www.apartments.com.au/new-apartments/la-vera-macquarie-park-94-talavera-road-macquarie-park-nsw-2113">La Vera</a> is leading the next phase of Macquarie Park's residential evolution, with the new apartment development set to become the first of several new apartment projects in the precinct to complete.

The 169-apartment building has now topped out ahead of its scheduled completion in the third quarter of 2026, as new residential investment continues to reshape one of Sydney's largest employment hubs into a true mixed-use precinct.

[smartcode_project:default project_id=134951 project_image_fid=368645]

Cox Architecture has designed La Vera to capture the best of its unique positioning on Talavera Road, orienting the building towards Lane Cove National Park.&nbsp;The building features a sculpted northern façade with flowing curves inspired by the surrounding landscape, while its city-facing elevation adopts a more structured architectural expression to maximise skyline views.

"The vision for the project was to conceive a building that adopted an organic and curvilinear form to the northern portion that faces the Lane Cove National Park," <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a> Director Felipe Miranda said.

"The residents that reside in the northern portion of the building benefit by having beautifully crafted curved balconies that speak to the natural context and heighten the relationship of their internal living spaces to the external balconies."

[smartcode_project:default project_id=134951 project_image_fid=358802]

La Vera offers a diverse mix of one, two, three, and four-bedroom configurations, with prices currently starting from $740,000. Buyers so far have been a mix of Sydney-based investors,&nbsp;metro commuters, owner-occupiers and downsizers from surrounding North Shore suburbs.

Both investors and owner-occupiers have been drawn to La Vera's proximity to Macquarie University, Macquarie University Hospital, Macquarie Centre and the Sydney Metro, infrastructure that supports both strong rental demand and a convenient lifestyle for residents.

The apartments feature full-height glazing, timber flooring throughout living areas, stone kitchen benchtops, SMEG appliances, floor-to-ceiling bathroom tiling and ducted air conditioning.

Residents will have access to a rooftop recreation level featuring a swimming pool, sauna, barbecue facilities and landscaped relaxation areas, complemented by additional communal space at ground level. Many apartments enjoy uninterrupted views across Lane Cove National Park, reinforcing the project's connection to its natural setting.

[smartcode_project:default project_id=134951 project_image_fid=364551]

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a>, a family-owned developer and builder with nearly four decades of experience, holds a 4.5-star iCIRT rating and was Australia's first developer to introduce 10-Year Latent Defects Insurance (LDI). La Vera is the first apartment development in <a href="https://www.apartments.com.au/developments/macquarie-park-nsw-2113">Macquarie Park</a> approved to offer the additional insurance protection, alongside a five-year warranty on SMEG appliances.

Urban Property Group CEO Patrick Elias said the additional protection reflects changing buyer expectations in the off the plan market.

"Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. Having LDI is a tool to portray the confidence that we have in our product, and a confidence we want buyers to share," Elias said.

Following completion of the building later this year, buyers will move into their apartments well before Christmas.

[smartcode_project_cta:default project_id=134951]

La Vera closes in on completion as Macquarie Park continues residential transformation

Shopping Centre

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The Muswellbrook Shire Council has exchanged contracts to buy the Muswellbrook Marketplace in the Upper Hunter Region for $34.25 million through Savills.
The Council decided on the purchase to connect the marketplace with Muswellbrook’s Main Street – a community priority of the Town Centre Masterplan.
The single-level mall at 72-78 Brook Street is the single largest landholding in the regional city’s CBD and was put on the market through an expressions of interest campaign earlier this year. 
The mall comprises 12,838 sqm of building area on 1.65 hectares.
The Centre includes a Woolworths Supermarket, Big W DDS, three mini majors and 28 specialty stores, and offers an estimated fully leased net annual income of $2.99 million, according to selling agents Steven Lerche and Andrew Palmer of Savills.
The asset is expected to return around 6.7% of its capital value per annum. The major sub-regional shopping centre is anchored by Woolworths Supermarket and Big W.
Buyer’s agent Damien Holliday of Prosper Group acted on behalf of the Council.
The acquisition of Marketplace aligns Council’s primary strategic objectives of the Muswellbrook Town Centre Strategy and the Future Fund, according to a media release.
The council plans to do a staged renovation of the building and will engage with the tenants towards that end.
“The marketing campaign generated interest from both local and interstate groups who have been looking for centres with value add opportunity,” said Lerche.
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Muswellbrook council buys Muswellbrook Marketplace for over $34 million through Savills

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Victorian shopping centres are emerging as the asset of choice for Chinese investors, with the sale of Arena Shopping Centre in Melbourne for $48 million being the latest transaction. 
Over the past 15 months, Chinese investors have spent more than $380 million buying shopping centres across Victoria – highlighting the ongoing strength in investment appetite for well-located assets backed by strong tenancy profiles, according to commercial real estate firm CBRE.
Arena Shopping Centre is located in the south-east suburb of Officer.  
It is anchored by a 4,100 sqm Woolworths Supermarket and BWS on a 20-year lease.
It is positioned on a 2.97 ha site, and has 25 specialty retailers as well as a freestanding McDonald’s and Caltex Service Station.
The centre generates an annual income of $2.65 million per annum and the initial yield works out at 5.38%.
<a href="https://www.propertyobserver.com.au/images/2017/04/27/MELBRetail.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/04/27/MELBRetail.png" alt="">
The sale was brokered by CBRE with the limited supply of neighbourhood shopping centres being offered to the market underpinning strong sale results. 
 
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Chinese investor snaps up Melbourne shopping centre for $48 million 

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Generation Z, considered the future shoppers of Australia, prefer to head in-store to make a purchase rather than buy online.
A recent report by AMP Capital, From A to Gen Z: Shopping with the Future Generation, found that 87 percent either like or love shopping in-store compared to 79 per cent who prefer to shop online.
Mark Kirkland, managing director of AMP Capital Shopping Centres, said the research highlights the importance of developing fun, social experiences in-store and the opportunities that emerge once brands and retailers align their online and offline offerings.
"The continued popularity of shopping in-store provides a positive outlook for retailers," he said.
"It’s important that, as an industry, we constantly evolve to adapt to the current trends that engage our future shoppers in order to stay relevant. It’s vital that retailers and shopping centres engage with the digital world to deliver a seamless online and offline experience that will create new and exciting avenues to connect with their customers. 
“Trailblazing Australian retailers such as Mecca Maxima and Culture Kings have captured the attention of Future Shoppers by creating a personalised customer experience that’s exclusive to in-store.
"These are just a few representations of the future of retail although we look forward to seeing more bold ideas from retailers within this innovative space.
 The RRP report identified four key themes:
1. Don’t panic! Traditional shopping is not dead
<ul>
<li> 53 percent of future shoppers feel more confident when shopping with others compared to just 27 percent of current shoppers.</li>
</ul>
2. Online and bricks-and-mortar work together
<ul>
<li>  61 percent of future shoppers research while in-store compared to 36 percent of current shoppers.</li>
<li>  63 percent of future shoppers use retailers’ wish list functions, compared to 43 percent of current shoppers.</li>
</ul>
3. Don’t just sell me something, mean something to me
<ul>
<li>  Just below 70 percent of both future and current shoppers prefer brands that give back to society.</li>
<li>  59 percent of future shoppers agreed they would pay more for sustainable products compared to 48 percent of current shoppers.</li>
</ul>
4. Male Future Shoppers are a whole new ballgame
<ul>
<li> 46 percent of male future shoppers have said they are more interested in staying ahead of popular trends than 36 percent of their female counterparts.</li>
</ul>
The term future shoppers is used to refer to adult Gen Zs between the ages of 18 – 22 years. Current Shoppers are used to reference the rest of the Australian population aged 23 and over.
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Future of shopping is bricks and mortar

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GUEST OBSERVER
The retail sector continues to thrive in Sydney. 
Low interest rates and Australia’s economic rotation has favoured the south eastern states with consumers, retailers and landlords all enjoying sector tailwinds through the second half of 2016. Unsurprisingly therefore, investor demand in the Sydney region is high, reflected in overall transactional volumes and the associated shift lower in yields.
In many instances, Sydney holds the lowest yield per retail asset class, and the potential for further compression is high, especially within the CBD sector. Strong investor appetite is supported by rental growth as infrastructure development and population growth facilitate consumer demand. 
 
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Melbourne 
The Melbourne retail market has been busier than ever, particularly on the shopping centre front. Institutional investors have been actively managing their portfolios, reinvesting capital into the development of prime assets with an aim to boost income streams and lift capital values. More than 377,000sqm
of shopping centre supply is expected to come online in Victoria through to 2021, boosted by projects such as Chadstone Shopping Centre, West eld Knox, Highpoint Shopping Centre, and West eld Doncaster.
This activity has also translated across the CBD, where landlords have been adding value to their assets to keep up with the competition from their suburban counterparts. We therefore expect rental growth to continue across all major retail markets in Melbourne in the next 12-24 months, as redevelopment activity and the growing presence of international brands continue to spur tenant demand. 
Adelaide
Rundle Mall has seen vacancy increase slightly in the last 12 months, with rents also which has reduced the average slightly. Sales volumes are well below last year, but this is due to two major assets in Rundle Mall transacting last year. Demand for assets in the precinct remain strong which has resulted in yields tightening over the last six months. New development is mostly outside Rundle Mall with developments proposed for the Central Arcade in the Central market and further investment in the public realm for key laneways in the CBD.
Perth
Retail vacancy in the CBD, particularly in the Hay and Murray Street malls, remained relatively low in Perth. This has seen CBD market rents out-perform Neighbourhood and Sub Regional centres, where rents have declined due to softer retail turnover growth, easing tenant demand and increased stock levels. This, along with a moderating population growth, has created more uncertainty for the timing of mooted major centre expansions. However, both population and nominal retail turnover growth are still forecast to grow, even if per capita spend continues to moderate.
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Brisbane
The Brisbane CBD continues to evolve into a new world city as part of the Brisbane City Council’s centre plan. As a result of Council’s works and a state economy that has proved to remain resilient, a number of private and public groups are investing substantial resources in Brisbane’s CBD. As a result of the developing vibrancy of the CBD there are major international brands along with bespoke operators entering the CBD, contributing to a positive feedback cycle which is expected to continue. 
New Zealand 
Eight years on from the global nancial crisis, many retailers in New Zealand have streamlined their operations, ramped up their sales campaigns and, in some cases, rationalised their space to meet the changing demand of the new consumer. New Zealand is also receiving more enquiry from international retailers and a select few national retailers are looking to expand their footprint with a more targeted approach. For these retailers, the new strategies being employed - although challenging - are working. 
Positive underlying retail conditions have given buoyancy to property leasing enquiry and activity. We are seeing occupancy highs in many locations - albeit retailers sticking to basics are the winners. Investors remain competitive and attracted to retail property due to the attractive gap between returns and debt costs in the current low interest rate environment.
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Daniel Lees is director of director of research, Colliers, and can be contacted <a href="https://www.colliers.com.au" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

Sydney, Melbourne retail markets busier than ever: Colliers

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One of the most significant retail assets on Brisbane’s bayside, the Horizon @ Wellington Point shopping centre, is being offered for sale by Ray White Commercial in conjunction with JLL.
The major investment opportunity at 685 Old Cleveland Road East, Wellington Point, is a fully tenanted shopping centre, which opened in December 2010.
It is anchored by an IGA Supermarket and 19 other retail and medical tenancies.
Horizon @ Wellington Point is a successful retail/medical complex which currently has 100% occupancy.
Offers close November 24 with Ray White Commercial Bayside agent Nathan Moore and JLL Retail Investment QLD’s Jacob Swan and Campbell Bowers.
The shopping centre returns net rental income of approximately $1.25 million per annum.
Swan said Horizon @ Wellington Point is situated on a land area of approximately 6,099 square metres with a local centre zoning from Redland City Council in an emerging growth centre of South East Queensland.
There is 2,616 square metres of nett lettable area in three buildings and prominent signage opportunities.
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Horizon @ Wellington Point shopping centre for sale

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In times of economic uncertainty retail property is largely regarded as a defensive investment due to the large percentage of non-discretionary spending supporting income streams, such as food.
Over the past 25 years, shopping centres have been increasingly acquired by institutional owners who could actively manage, develop and maintain these centres. The global financial crisis severely curtailed the purchasing power of institutions and allowed other buyers to enter the market.
A sub regional shopping centre is generally defined in the industry as a local shopping centre comprising at least one full line supermarket, a full line discount department store and around 40 or more specialty shops.
The total gross lettable area of retail  floorspace will typically range between 10,000 and 30,000 square metres. The key features include convenience and an expanded range of food, fashion and services, located in residential areas servicing many immediate neighbourhoods. Trading hours will generally be extended and will cater for basic day-to-day retail needs.
Clearly, a number of important factors impact the performance of a sub regional shopping centre. The performance of the supermarket and discount department store has a very strong bearing on the returns of the centre. The supermarket and discount department store can be impacted by the range on offer, the price point, the ratio of car parking and opening hours. This, in turn, can impact the performance of the adjoining specialty stores.
The catchment area also impacts the performance of the centre. The road system, the points of access and competition are important factors. Critically, the size and age of the population as well as capacity for growth in population over the long term can have a material impact on centre performance. Increasingly, ethnic factors are playing a role as centres need to deal with strong levels of immigration.
Employment
The retail sector always faces cyclical and structural issues. Some cyclical issues are starting to move in its favour.
Employment is growing strongly in four or five sectors and shrinking in four or five sectors and the jobs gained and lost are not necessarily in the same physical place. This means certain catchment areas are doing it tough and some are doing well.
The size and shape of the workforce has a profound impact on retail property because wages determine spending and jobs de ne catchment areas. Australia is almost unique in the world as being one of very few countries that have expanded their workforce over the last decade. The size of the Australian workforce continues to grow and unemployment edges down.
This has occurred partly because wages growth has been insipid allowing more workers to be hired than may otherwise be the case. Asset price inflation has bolstered household wealth whilst household income growth has been subdued. Positive contributions to household spending capacity have come in the form of lower interest rates, lower petrol prices and greater comfort around job security. Nevertheless, growth in household disposable income remains below average.
The newly arrived population has a profound impact on property because they need somewhere to live and goods to put in their homes. Instant housing and bulky goods demand. Less people leaving the country means fewer houses freed up for those arriving.
With the size of the workforce growing and more people coming into the country (and less leaving), it is little wonder that a record level of housing construction is underway. A moderation in bank lending coupled with changes to taxation on foreign investors and stringent planning rules has seen a recent fall in dwelling building approvals. This leads us to believe we are at, or near, the peak in housing construction for this cycle. 
Consumer spending
Changes in consumer spending patterns since 2007 appear to have had an adverse effect on department store, apparel and discretionary retailing turnover generally.
This has impacted tenants in regional and some sub regional shopping centres. Some sub regional shopping centres have been immune from this. The ABS turnover statistics in the accompanying table show strong growth over a long period in most of the retail categories found at a sub regional shopping centre. Supermarkets have been enjoying strong turnover growth as have their associated liquor stores.
Discount department stores dealing in electronics, household goods including furniture and discount clothing have also enjoyed strong turnover growth. Associated specialty stores such as a chemist, a take away food store, a bakery, a newsagent and other local service providers such as a dry cleaner may be found in the tenancy mix.
<a href="/images/2016/09/29/National%20Retail%20Turnover%20Growth%20by%20Category%20Seasonally%20Adjusted%2012%20months%20to%20May%202016.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/29/National%20Retail%20Turnover%20Growth%20by%20Category%20Seasonally%20Adjusted%2012%20months%20to%20May%202016.jpg" alt="">
The structural issues facing retail are more formidable but not insurmountable. Savills expects the retail sector to evolve to take advantage of the structural issues rather than be over-run by them. The ageing of the population will continue to create challenges for retailers as they jockey for the dollars of retirees.
Retirees can be expected to prefer services over goods and will not necessarily continue to dwell in their traditional catchment areas. Internet retailing has already changed the face of retailing for certain categories of goods and will no doubt continue to evolve and challenge more categories over time. New business models are establishing themselves.
<a href="/images/2016/09/29/Change%20in%20Moving%20Annual%20Turnover%20by%20Category.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/29/Change%20in%20Moving%20Annual%20Turnover%20by%20Category.jpg" alt="">
Sales activity
Savills recorded $1.9 billion of sub regional shopping centre transactions nationally in the 12 months to June 2016, commensurate with $1.9 billion in the previous year and up on the five-year average of $1.6 billion.
In the year to June 2016, 20 sub regional shopping centres were sold against 23 the previous year and is commensurate with the five year average of 20 sales per annum.
<a href="/images/2016/09/29/Sub%20Regional%20Property%20Sales.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/29/Sub%20Regional%20Property%20Sales.jpg" alt="">
There are several factors at work in the capital markets which are having an impact on asset prices. First, there is an abundance of debt and equity available to purchase prime commercial assets on current metrics; second, the pricing of debt and equity domestically, and especially overseas, continues to fall; third, investment fundamentals are sound with no oversupply, little vacancy and good rental growth; and, finally, catchment area fundamentals remain appealing with strong population growth, low unemployment and stable to rising household incomes.
<a href="/images/2016/09/29/Sub%20Regional%20Property%20Sales%20by%20State.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/29/Sub%20Regional%20Property%20Sales%20by%20State.jpg" alt="">
Institutions remained active in the investment market for the 12 months ended June 2016, purchasing 77% of all sub regional shopping centres sold. Foreign investors continue to pursue sub regional shopping centres purchasing 9% of sub regional shopping centres sold. Conditions for Australian institutions have continued to improve and so private investors are increasingly finding themselves unable to compete.
<a href="/images/2016/09/29/Sub%20Regional%20Property%20Sales%20Buyer%20Profile.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/29/Sub%20Regional%20Property%20Sales%20Buyer%20Profile.jpg" alt="">
The average initial yield analysed from transactions of sub regional shopping centres in the year to June 2016 was 6.84% and compares to 7.47% the previous year. The average equated market yield analysed from transactions in the year to June 2016 was 6.97% and compares to 7.49% the previous year
<a href="/images/2016/09/29/Sub%20Regional%20Property%20Sales%20Vendor%20Profile.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/29/Sub%20Regional%20Property%20Sales%20Vendor%20Profile.jpg" alt="">
 . Prime neighbourhood yields at 6.75% in 2006, softening 100 basis points to 7.75% during the GFC and firming 200 basis points to 5.75% currently
. Prime sub regional yields were also at 6.75% in 2006, softening 50 basis points to 7.25% during the GFC and firming 150 basis points to 5.75% currently
. Prime regional (excluding super regional) yields were at 4.75% in 2006, softening 100 basis points to 5.75% during the GFC and firming 100 basis points to 4.75% currently
<a href="/images/2016/09/29/Sub%20Regional%20Property%20Sales%20by%20State%20graph.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/29/Sub%20Regional%20Property%20Sales%20by%20State%20graph.jpg" alt="">
Given the falling costs of both debt and equity and the adopted “lower for longer” view of Savills Research we believe there is more yield compression to come.
Nationally, shopping centre investment yields have continued to firm as highlighted in the both the chart below and in the tables of recent transactions. Sub regional shopping centres continue to transact across a broad range of yields in line with the characteristics of the individual properties.
<a href="/images/2016/09/29/Buyers%20and%20Vendors.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/29/Buyers%20and%20Vendors.jpg" alt="">
Sub regional shopping centre yields as at June 2016 currently range between 5.75% and 7.00%. Typically, yields have firmed from the trough in 2010 by 160 basis points for sub regional shopping centres.
<a href="/images/2016/09/29/Market%20Yields%20by%20Centre%20Type.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/29/Market%20Yields%20by%20Centre%20Type.jpg" alt="">
Outlook
Australia has been enjoying strong population growth for over a decade and this policy of immigration retains bi-partisan support at Federal Government level.
The history of wealth (and real estate wealth in particular) is the history of immigration. Australia, and Australian capital cities in particular, is forecast to enjoy the fruits of strong immigration.
Retail property can be expected to be a beneficiary of strong population growth. Clearly, some catchment areas will do better than others and this will continue to present the greatest challenge and greatest opportunity for investors.
Catchment areas that can grow their populations through new land release or infill development or pro-active planning policies, should show dramatic increases in turnover especially if the ability to increase retail floorspace is limited. Conversely, those catchment areas that cannot grow their populations with limited available new land supply, draconian or archaic residential planning systems and the capacity for expanded retail competition should deliver below average increases in turnover.
Savills is of the view that interest rates will be “lower for longer” and, combined with a weight of investment capital, should continue to see assets keenly sought after and strong yields given prevailing catchment area fundamentals.
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Many factors in play for sub-regional shopping centre success: Savills

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The Charter Hall Group has teamed up with leading super fund MTAA Super to acquire Campbelltown Mall for $197 million, in the largest individual sub-regional shopping centre transaction in 2016.
Charter Hall bought the mall from Perron Group, with JLL’s Simon Rooney negotiating the deal. The transaction reflects a market capitalisation rate of 6%, said a media release.
Campbelltown Mall is located in one of Sydney’s largest south western suburban business districts and comprises an established, performing convenience-based shopping centre. 
The mall comprises Coles, Woolworths, Kmart, Target and Aldi together with 10 mini majors and 84 specialty tenancies, with a 98% occupancy and 4.7 year weighted average lease expiry. It’s gross lettable area is more than 42,200 sqm and sits on a 7.2 hectare site.
Rooney, JLL’s head of Retail Investments – Australasia, said, “We continue to see a depth of institutional investor interest in strong performing sub-regional shopping centres, especially for assets in growth corridors, with opportunities for value add.”
Charter Hall has set up a fund called Charter Hall Prime Retail Fund (CPRF) to manage the asset along with MTAA. Charter Hall said it will co-invest $46 million for the acquisition.
Charter Hall’s retail head Greg Chubb said,” The property is the seed asset for CPRF, which will focus on acquiring and actively managing larger convenience-based retail centres with strong growth potential.”
The deal is due to close in October 2016.
Rooney added that Campbelltown Mall was the largest individual sub-regional shopping centre sold this year following divestments by Vicinity Centres.
The largest sub-regional transactions for 2016 to date, include Vicinity Centres sales of:
• Four sub-regional centres to Blackstone and Mirvac (AUD 841.4 million) in June
• A 50 percent interest in Runaway Bay to Perron Group (AUD 160 million) in June; and
• A 50 percent interest in Tuggeranong Hyperdome to TTCT Investments (AUD 120 million) in September.
“The sub-regional sector has continued its record level of activity, with $1.7 billion in transactions in 2016 year-to-date, building on the $2.8 billion in 2015 – which was a record high for the Australian market,” said Rooney.
 
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Charter Hall acquires Campbelltown Mall for $197 million

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A Fort Street Real Estate Capital-managed fund has bought two neighbourhood shopping centres.
Set in Sydney and Adelaide they cost close to $70 million taking the total asset value in the Australian Property Opportunities Fund II to $130 million.
David Rogers, director of investments for Fort St Real Estate Capital, said despite yield compression commercial real estate like retail malls remain desirable.
APOF II has acquired the Marketfair Campbelltown mall for $48.25 million, representing a fully leased yield of 6.5 percent through Stonebridge Property Group.
The identity of the Adelaide centre has not been disclosed. It is understood the price was just under $20 million.
Fort Street Real Estate is a joint venture between Fort Street and Dixon Advisory Group.
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Fort Street Real Estate Capital and Dixon Advisory seek further retail investments

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AMP chief executive officer Craig Meller and City of Gold Coast Mayor Tom Tate opened AMP Capital's Pacific Fair shopping centre on the Gold Coast following a $670 million redevelopment.
Construction began January 2014 with 50,000 square metres (sqm) added to the existing centre. At 155,000 sqm Pacific Fair the fourth largest shopping centre in Australia with around 420 stores.
The last stores are slated to open September 2016.
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AMP Capital opens $670m Pacific Fair on Gold Coast

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Sentinel Property Group has sold off the Jimboomba Junction Shopping Centre in Queensland’s Logan City for $27.48 million in an off-market deal, continuing with its recent divestment of assets.
The Coles-anchored neighbourhood shopping centre at 665-687 Cusack Lane services the rural township of Jimboomba in Logan City, midway between Brisbane and the Gold Coast.
Sentinel acquired the site in September 2014 for $20 million and the current deal follows on the heels of its sale of an industrial property at Richlands in Brisbane for $15.75 million.
The Jimboomba deal was brokered by Jacob Swan of JLL.
The property consists of five separate buildings with a total net lettable area of 5,949 sqm and 281 carparks. Tenants include Coles, The Reject Shop, Amcal, Caltex, Red Rooster, Brumby’s Bakery, Zarraffas Coffee plus 13 specialty retailers and professional suites.
Sentinel managing director Warren Ebert said it was a great result for its investors. 
“Investors in the Sentinel Jimboomba Retail Trust have enjoyed two years of consistent returns of 10% per annum paid monthly and now also benefit from a strong capital return on divestment,” he said.
“There is a time to buy and a time to sell and we will continue to review all opportunities to deliver attractive capital growth to our investors,” Ebert said. “We have bought very well in what were unloved sectors at the time but are now back in favour. As a result, we are receiving a number of unsolicited offers to acquire our strongly performing assets.”
Ebert said Sentinel was also exploring a number of potential acquisitions in the retail, industrial and office sectors nationally, in line with its investment criteria.
Brisbane-based Sentinel has more than 600 investors nationally who receive monthly returns from rental income, as well as special capital return payments on revaluations and capital growth returns on divestment.
Established in 2010, Sentinel (<a href="https://www.sentinelpg.com.au/">www.sentinelpg.com.a</a>u.) is among Australia’s top unlisted commercial property fund managers, with a portfolio of 43 retail, industrial, office, land, tourism and agribusiness assets valued at more than $1 billion.
It has occupied the No. 1 spot on the PCA/IPD (Property Council of Australia/Investment Property Databank) Non-Core Property Fund Index 42 of the last 49 months.
The index, introduced in October 2011, is backed by the global equity indexes of Morgan Stanley Capital International (MSCI) and is based on total fund performance.
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