by Peter Semple @ The Age

Melbourne's retail investment market has continued its dominance of the commercial property market this year with more than $75 million in transactions in less than three months, despite what some agents say is a quiet start to the year.

The swing towards the retail sector exploded last year when $404 million was invested in the sector - almost 30 per cent more than the $315 million spent in 2000.

According to CB Richard Ellis retail investments director Cameron Way, the drivers have been low interest rates and the first home owners grant, with the grant leading to strong retail spending as people furnished new homes.

He said according to ABS figures, seasonally adjusted spending in all retail sectors on a national basis for the year to January was up 8.7 per cent and up 1.4 per cent from December.

Mr Way said the figures also revealed in the three months to January, the food, household goods, and clothing and softgoods retailing sectors recorded the largest increases in spending - a telling indicator of the impact of the first home owners grant.

``The first home buyers grant, which has been given to 61,000 applicants equating to $425 million, has created an influx in retail spending, particularly for household goods, whilst the strong population growth in areas attracting first home buyers has boosted investment sales of smaller, convenience-based shopping centres," he said.

The sector that benefited most from the surge in retail spending were smaller shopping centres (3000 to 4000-square-metre supermarket and 12 to 30 specialty stores), Mr Way said, with investors snapping up neighbourhood centres and homemaker centres in a bid to cash in on the strong growth.

Syndicator MCS Property has been the dominant player, spending more than $36 million on the Gateway Shopping Village in Langwarrin, Meadow Heights Shopping Centre in Meadow Heights, and the Rosebud Village Shopping Centre.

MCS was also prominent last year along with Centro, Lascorp, and the Zagame, Herszberg and Munz families.

Most of the sales in 2001 also comprised neighbourhood centres, with the exception of the 50 per cent share of Greensborough Shopping Centre and Cranbourne Park, and two Homemaker centres at Epping and Thomastown. Mr Way said existing retail supply was struggling to meet consumer demand, leading to new developments such as Lascorp's 4900-square-metre centre at Bundoora anchored by a 3200-square-metre Coles supermarket and a centre next to the Sanctuary Lakes resort.

He said the growth in retail spending and continuing demand for household products would also strengthen the bulk goods sector, attracting more investors to the sector this year.

``Business confidence is now at a two-year high, and economic growth now stands at 4 per cent, which can only boost (retail) investment demand," he said.

Author: Peter Semple
Date: 27/03/2002
Words: 483
Publication: The Age
Section: Business
Page: 8