Weekly Update 19/7/2021

19 July 2021

Welcome to this week’s Property News.

This week we released our summary of real estate transaction in Q2, 2021. The data shows a surge in real estate deals taking the total above $15bn for the 3 months to June 2021, a growth of over 24% on the same pre-pandemic period in 2019. The industrial sector was by far the busiest with $6.5bn of transactions, thanks to the sale of $4.6bn of logistics assets by Blackstone. Interestingly, office and retail transactions which typically account for 75%+ of total real estate transactions, have fallen to be just 35% – 45% of total sales as the risks in the Office and Retail sector have increased. Vendors in these sectors, particularly those with sub quality assets will try and avoid selling their assets during the pandemic. See our full review of transactions here.

Our other focus this week, has been on the ESG front and particularly in respect of sustainability initiatives across the industry. It is clear to us, that a major shift by sophisticated investors toward investing only in the more environmental efficient buildings will continue to drive the implementation of sustainable measures in both the development and management of assets going forward. We thought it would be useful to maintain a register of go-to resources for organisations to make better decisions about their sustainability strategy. Check it out here.

In other news this week, we have also reviewed a number of recent sales in the large format retail sector and note with interest the sale of Casey Central by M&G Investments on a 5.4% yield. This is an extraordinary solid price for a sub-regional asset and will give the sector a new benchmark for future valuations. Whilst the Centre does have a large number of discretionary tenants, it is anchored by 3 quality supermarkets and the best of the DDS’, KMart. The Centre also offers good parking and convenient access, all critical features for a strong performing centre. The key point here is that not all Centres are equal and each need to be considered in light of the performance of the retailers within and the primary and tertiary trade area in which they operate. Casey Central clearly ticks the boxes for Haben.

In economic news this week, Australia’s jobless rate dropped to just 4.9%, the lowest rate since 2010. The low level will be short lived however, with NSW and Victoria in the middle of significant lock downs which will once again see people out of employment. Australia’s third quarter economic growth should be disrupted by the lock down as consumer expenditure retreats however news this week that Australia’s exports to China hit a new record high (thanks to strong growth in China), up 36% in the first 6 months of 2021 means that economic growth is likely to remain in positive territory.

If you have any news, information or research reports you’d like us to share with the market, please feel free to send me an email at info@propertymarkets.news.