APPD Market Report Article
Sydney
May 26, 2024Andrew Quillfeldt, Head of Capital Markets Research, Australia
0.5%
AUD 1,716
Rents
Stable
Annual rent growth is strongest in the neighbourhood sub-sector
- Rolling annual retail trade growth to February 2024 reached 1.7%, below the national average of 2.4%.
- Enquiry levels were higher post-December holidays. Operators remained risk-averse, hence the conversion rate to leases was softer, leading to stable leasing volumes.
New retail supply of 16,700 sqm comes online
- Oran Park Podium’s extension project reached completion, introducing 16,700 sqm of new retail space to the market. Warrawong Plaza’s and Plumpton Marketplace’s refurbishment projects have been completed.
- Quarterly completions were 45% below the ten-year quarterly average of 24,100 sqm.
Yield decompression in the CBD and neighbourhood sub-sectors
- Yields softened in the CBD and neighbourhood sub-sectors by 13 bps.
- Six assets transacted, totalling AUD 243.8 million.
Outlook: Low supply to increase existing asset productivity
- The supply pipeline is likely to remain soft as labour shortages and debt costs impact project feasibility.
- Discretionary spending likely to remain subdued as the RBA’s cash rate increases continue flowing through the economy.
