APPD Market Report Article
SE QueenslandFebruary 28, 2023
Andrew Quillfeldt, Senior Director - Research, Australia
Queensland retail spending has been stable
- Queensland recorded positive retail spending growth for the month of October, increasing by 9.1% y-o-y. However, this was below the national average of 11.0% for October 2022. Growth was led by cafes, restaurants and takeaways (21.1%) and clothing, footwear and access (15.6%).
- Despite rising interest rates and the cost of living, consumer spending remains strong due to a combination of household savings, wage growth and a tight labour market.
Several projects are delayed due to market factors
- The large format retail project at Big Fish Caboolture reached completion this quarter. There are 11 retail projects currently under construction. Of the projects under construction, eight are new projects with completions due in the next twelve months, adding 111,000 sqm of retail space to the sector.
- Several project completion dates have been pushed back mainly due to increased construction costs and ongoing labour shortages.
Yields have remained relatively stable overall
- Transactional activity totalled AUD 611 million in the quarter. Notable transactions included Caneland Central (AUD 280 million) and Stockland Gladstone (AUD 139 million).
- Regional sector gross rents have slightly decreased by 0.25%. Rents for all other sub-sectors have remained stable in the quarter.
Outlook: Non-discretionary assets will be highly valued
- Investors are likely to favour non-discretionary assets in the near term, as the cost-of-living pressures translates into subdued discretionary spending on the part of consumers.
- Economic uncertainty, mounting construction costs and labour shortages will likely continue to draw out construction timeframes.