Retail property still delivers despite rise of online shopping
Prime retail property assets are expected to remain a solid investment despite the growth of e-commerce, TIAA Henderson Real Estate (THRE) believes.
THRE executive director and head of Australia, Nick Evans, said the retail property sector was primed to continue it strong performance and secure increased returns for investor in 2015.
"Technology and consumer preferences are having a dramatic impact on retail formats across the globe," he said.
"We are advising clients that well-located and dominant retail scheme, with the flexibility to adapt and meet customer service demands, will be the future winners.
"E-commerce has seen a significant shift in buyer trends and preferences, with retailers in merchandise categories like books, music and electronics, taking a considerable hit. But buyers are still looking for that tangible experience when it comes to purchasing items such as clothing and home furnishings — they still like to touch and feel, so while retailers are growing their online sales, a network of physical stores is still essential.
"The natural attrition of centres that lack a distinct location or critical mass, is actually improving outcomes and future prospect for dominant centres that are well-located.
"Expanding retailers looking to secure space in gateway locations and high profile centres will pay keenly to do so."
Evans added that retail property was an "attractive option" for investors due to its low volatility, long lease terms and the diversity of tenants.
"Investment in good quality retail assets can provide investors with some of the best defensive, risk-adjusted returns around," he said.
"Dominant retail centres attract significant price tags so we are concentrating on developing strategies to help institutional investors access in this market at a reduced outlay."
AUTHOR
Nicholas O'Donoghue
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