February 2014 Savills Research. Insight. Insight. Australian Retail Market February 2014

Transcription

1 February 2014 Savills Research Insight Insight Australian Retail Market February 2014

2 Savills Research Australian Retail Market Highlights In seasonally adjusted terms, national retail turnover growth was up 2.9 percent in the 12 months to November The rate of growth has fallen slightly from 3.2 percent in the year to November The retail sector faces both cyclical and structural issues. Some cyclical issues are starting to move in its favour. The level of retail construction is showing signs of recovery as capital conditions (both debt and equity) begin to thaw. Savills recorded $6.1 billion of retail property transactions nationally in the year to December 2013, up from $4 billion in the previous year. Institutions were the most active in the investment market for the year ended June 2013 purchasing 61 percent of all retail property sold. 02

3 February Highlights In times of economic uncertainty retail property is largely regarded as a defensive investment due to the large percentage of nondiscretionary spending supporting income streams, such as food. Over the past 25 years, shopping centres have been increasingly acquired by institutional owners who could actively manage, develop and maintain these centres. The global financial crisis severely curtailed the purchasing power of institutions and allowed other buyers to enter the market. The retail sector faces both cyclical and structural issues. Some cyclical issues are starting to move in its favour. Consumer confidence is improving, certainly not deteriorating and the cyclical falls in interest rates are certainly helping. Employment is growing strongly in four or five sectors and shrinking in four or five sectors and the jobs gained and lost are not necessarily in the same physical place. This means certain catchment areas are doing it tough and some are doing well. The size and shape of the workforce has a profound impact on retail property because wages determine spending and jobs define catchment areas. Australia is almost unique in the world as being one of very few countries that have expanded their workforce during the global financial crisis. The Australian workforce has grown by almost a million people from 10.7 million to 11.6 million from November 2007 to November Over the past year we have shed jobs in Agriculture, Real Estate, Manufacturing, Mining and IT. However, we have created twice as many jobs as we have lost Retail, Healthcare, Government and Transport. Over the six years of the global financial crisis we have shed jobs in Manufacturing and Agriculture but we have created five times as many jobs elsewhere. These same trends have been present for 30 years (with some bumps along the way). Agriculture and Manufacturing have been in the doldrums for 30 years an entire generation this is not new news. Whilst we have lost 256,000 jobs in these two sectors, we have created 21 times the same number of jobs in other sectors a total of 5.3 million jobs. How much more is earned in these newly created jobs? If workers are paid more, they put more into superannuation, they pay more tax, they spend more and they pay more for a house a virtuous property cycle. The newly arrived population have a profound impact on property because they need somewhere to live and goods to put in it. Instant housing and bulky goods demand. Less people leaving the country means fewer houses freed up for those arriving. With the size of the workforce growing and more people coming into the country (and less leaving) it is little wonder that a recovery in housing is underway. It may not feel like a boom, but it is starting. Credit growth has been rising for a year and prices for dwellings are starting to rise again. Changes in consumer spending patterns since 2007 appear to have had an adverse effect on department store, apparel and discretionary retailing turnover generally. This has impacted tenants in Regional and some Sub-Regional shopping centres. Lower turnover combined with increasing rents has led to specialty occupancy costs rising to an average of 22 percent (and in some cases substantially higher) in Super Regional, Major Regional and Regional Shopping Centres. This is a level that could generally be described as unsustainable and any one or combinations of three things are likely to happen from here. One, occupancy costs fall to a more sustainable level; two, incentives are provided by the landlord to mitigate the high occupancy costs; three, turnover increases as consumers return. In any case, the returns from this sector of retail appear to be constrained for the foreseeable future. The structural issues facing retail are more formidable but not Consumer confidence is improving, certainly not deteriorating and the cyclical falls in interest rates are certainly helping. Tony Crabb, Savills Research savills.com.au/research 03

4 Savills Research Australian Retail Market Australian Retail Retail Property Sales ($m and number) Dec-03 to Dec-13 $8,000 $7,000 $6,000 $5,000 Sales >$5m (LHS) No (RHS) $4,000 $3, $2,000 $1, $0 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 0 Source: Savills Research Australian Retail Retail Property Sales by Price Range ($m) Dec-03 to Dec-13 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 <$10m $10m - $50m $50 - $100m >$100m Savills recorded $6.1 billion of shopping centre transactions nationally. Savills Research $1,000 $0 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Source: Savills Research insurmountable. Savills expect the retail sector to evolve to take advantage of the structural issues rather than be over-run by them. The ageing of the population will continue to create challenges for retailers as they jockey for the dollars of retirees. Retirees can be expected to prefer services over goods and will not necessarily continue to dwell in their traditional catchment areas. Internet retailing has already changed the face of retailing for certain categories of goods and will no doubt continue to evolve and challenge more categories over time. New business models are establishing themselves. One of the new business models is a clicks and bricks strategy where the store and the online presence work together to drive sales. This strategy is still in its infancy in Australia. Recently, the Reserve Bank of Australia has forecast a peak in mining investment and has seen fit to cut interest rates to their current level of 2.5 percent. This also reflects ongoing low levels of inflation, a steady labour market and more room for the non-mining side of the economy to grow. Savills recorded $6.1 billion of shopping centre transactions nationally in the 12 months to December 2013, up from $4 billion in the previous year and up on the five-year average of $3.5 billion. In the year to December 2013, 118 shopping centres were sold against 92 the previous year and an increase on the five year average of 86 sales per annum. 04

5 February 2014 Clearly, both buyers and sellers were unwilling to transact large shopping centres in The uncertainty surrounding the global credit crisis left buyers and sellers paralysed. In 2010, a thaw in conditions meant both buyers and sellers could transact with greater confidence. This is reflected in the increase of sales of centres in the greater than $100 million range. Traditionally, the retail property market in Australia has been a two tiered market, with the majority of sales volume occurring in the lower value range and a select few major retail investment properties changing ownership in any given period. However, it can be seen clearly during the height of the global financial crisis in 2008 and 2009, there was a significant fall in high-end sales. In the 12 months to December 2007 $2.6 billion transacted in the greater than $100 million category. This fell to $153 million in one transaction in the year to December 2009 and has risen to $2.9 billion in the year to December 2013 with 13 shopping centre transactions recorded in the greater than $100 million category. Important recent transactions include: ÎÎA 50 percent share in Centro Bankstown traded in June 2013 for $284.3 million as aprt of a portfolio with a total value of $602 million. The two level Regional shopping centre has a total GLA of 82,742 square metres. The Centre comprises a Myer Department Store, Big W, target and Kmart Discount Department Stores. A Woolworths and a Supa IGA are complemented by 14 mini majors and 120 specialty stores. The centre had 8 percent vacant at the time of sale. The passing yield was 7.14%. Parking for 3,237 vehicles is made possible on a site of hectares. ÎÎThe May 2013 purchase of the GPT Group s 50 percent interest in Erina Fair Shopping Centre on the central coast of NSW reportedly purchased for $397.1 million by South Korea s National Pension Service. The transaction reflected a market yield of between 6.00%-6.25% and an IRR of approximately 8.75%. The remaining 50% is owned by Australian Prime Property Fund Retail, with the Centre being managed by Lend Lease. Lend Lease will continue to manage the Centre as the purchase excluded any management rights. Erina Fair is a predominantly single level, major Regional shopping centre with a total GLA of 102,291 square metres. The centre comprises a Myer Department Store, Big W, Kmart and Target Discount Department Stores, Woolworths, Coles and Aldi supermarkets, a Hoyts cinema complex, in addition to 249 specialty tenancies. ÎÎThe acquisition of Greensborough Plaza in Victoria by private equity group Blackstone in June 2013 from Australian Prime Property Fund Retail and Lend Lease Funds Management Limited for a purchase price of $360 million reflects a market yield in the vicinity of 7.25%. This three level Regional shopping centre has a Centre GLA of approximately 61,940 square metres, comprising a two level Target Discount Department Store that was previously occupied by Myer, a Kmart Discount Department Store, Coles and Aldi supermarkets, an eight screen Hoyts cinema complex and approximately 185 specialty and kiosk tenancies. ÎÎIn November 2013, Harbourside Shopping Centre transacted for $252 million on an initial yield of 6.48%. The Centre has a GLA of 19,930 square metres and houses 11 mini majors, 155 specialty stores and has provision for 255 car spaces. The Centre comprises various leasehold stratum lots on a 99 year lease expiring in savills.com.au/research 05

6 Savills Research Australian Retail Market Economic Conditions Europe continues to move in and out of recession, China manages growth around 7 percent and the tapering of quantitative easing in the United States appears to steady the global bond markets, capital flows and currencies. The calendar year 2013 marked a significant recovery for investment markets with property sales turnover at record levels and strong gains made on local and global sharemarkets interest rates have stayed low, the search for yield and security remained strong however there has been more capital allocated for higher risk property including development. The S&P500 index rose 25 percent to a record high reflecting cheap capital and a sense of economic recovery in the United States. The Australian ASX200 Index rose 13 percent and the Australian dollar fell 15 percent against the US dollar. Nationally, over $22 billion of commercial property has been transacted and over 3 million square metres of industrial and office space has been reported leased which gives us confidence that the markets are operating normally. The calendar year 2013 marked a significant recovery for investment markets Savills Research Commercial property yields in particular continue to look attractive. The Australian economy is being rebalanced as growth in mining softens. This means housing and retail should continue to lift with positive knock on effects to industrial and office markets. As consumer confidence continues to rise, so should business confidence. As profit margins are restored, business decision making should gain momentum. Some State governments will move into election mode and could be expected to provide some stimulus to parts of the economy providing further momentum to investment markets. China and the United States are forecast to contribute positively to Australia s economic outlook whilst Europe could be on the cusp of a subdued recovery. With regards to retail sales turnover figures, in seasonally adjusted terms, national retail turnover growth was up 2.9 percent in the year to November The rate of growth has fallen slightly from 3.2 percent in the year to November 2012 as consumer confidence improved in the face of falling interest rates. This growth took annual national turnover from a seasonally adjusted $255 billion to $263 billion in the 12 months to November Retail turnover in Australia can be further divided into six broad categories. These categories are food, household goods, department stores, clothing and soft goods, hospitality and services, and other. Retail spending in categories such as hospitality and services tend to exhibit greater volatility due to the discretionary nature of the spending whilst spending on food remains relatively constant. Although turnover may be rising, retailer profit margins can be under pressure as lower prices are used to entice customers to purchase. This has been characteristic of the Australian retail market for some years now. Of the six retail categories most are showing half the growth rates achieved over the last 20 years. This is hardly surprising given the circumstances of technological change, currency movement and consumer behaviour. Significant weakness continues in department stores, clothing and household goods. Whilst it is difficult to get at exactly what the consumer is doing, we know from the National Accounts data that household savings rates are amongst the highest since This in some ways explains the lacklustre growth in retail trade. Substitution on overseas internet sites where the strength of the Australian dollar translates to immediate cost savings to the consumer could also go some way towards explaining weakness in clothing and department store turnover. Also, lower shelf prices for imported goods serves to keep dollar turnover low whilst volumes still grow. Clearly there also appears to be some switching from expenditure on goods to expenditure on services. National Retail Turnover Growth by Category (Seasonally Adjusted, 12 months to November 2013) Dept H Hold Food Stores Clothing Goods Other Hospitality Total Annual Growth 4.2% -0.5% 3.0% 1.9% 1.1% 4.0% 2.9% 5 year compound 4.5% 0.0% 1.7% 1.1% 3.6% 6.2% 3.4% 10 Year compound 5.5% 1.6% 3.3% 3.3% 4.1% 5.9% 4.5% Source: ABS/Savills Research 06

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8 Savills Research Australian Retail Market Australian Retail Trade Change in Moving Annual Turnover by Category Nov-03 to Nov-13 Australian Retail Retail Property Buyer Profile (%) 12 months to Dec-13 20% Food Household goods Other retailing Clothing, footwear & personal accessory Department Stores Cafes, restaurants & takeaway food 15% 10% 5% 0% Key -5% Nov-03 Nov-04 Nov-05 Source: ABS/Savills Research Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Private Investor 17% Developer 1% Foreign Investor 20% Syndicate 2% Undisclosed 2% Trust 36% Fund 22% Source: Savills Research 08

9 February 2014 Australian Retail Retail Property Vendor Profile (%) 12 months to Dec-13 Key Private Investor 24% Developer 8% Foreign Investment 1% Syndicate 16% Owner Occupier 15% Mortgagee 1% Trust 22% Fund 13% Source: Savills Research Sales Activity Foreign and private investors remained active in the investment market for the 12 months ended December 2013, purchasing 37 percent of all retail property sold. Institutions represented by Funds, Trusts and Syndicates accounted for a combined 61 percent of purchasing activity. Private investors had been sidelined from purchasing retail property for a number of years due to strong demand from institutional investors. Also of particular note is the emergence of foreign investors purchasing 20 percent of retail property sold. Evidently, the global financial crisis created a window of opportunity for private and foreign investors to re enter the market. Conditions for Australian institutions have continued to improve and so private and foreign investors are increasingly finding themselves unable to compete again. Evidence from transactions between $10 million and $100 million has shown a softening in market yields from peak to trough. This is further illustrated by analysis of valuations of institutional assets where neighbourhood and subregional yields have softened by between 100 and 200 basis points and regional centres have softened by around 75 basis points. Private investors have been concentrating on initial yields as the driving force for investment rather than focusing on total returns or market yields. This is primarily due to the cost of debt and the scarcity of finance for purchases in excess of $100 million. While interest rates remain relatively low, emphasis is expected to be placed on the initial yield of investments in the short term. Australian Retail Retail Property Sales by State ($m and number) 12 months to Dec-13 $3,000 Sales >$5m (LHS) No (RHS) 60 $2, $2, $1, $1, $ $0 Source: Savills Research NSW VIC QLD SA WA 0 Institutions accounted for 61 percent of purchasing activity. Savills Research savills.com.au/research 09

10 Savills Research Australian Retail Market Nationally, shopping centre investment yields have stabilised as highlighted in the both the chart below and in the tables of recent transactions. Neighbourhood and smaller sub-regional centres continue to transact across a broad range of yields in line with the characteristics of the individual properties. Clearly some confidence and balance sheet repair has occurred as Trusts, Funds and Syndicates have re-entered the market accounting for 61 percent of combined purchaser activity. This would tend to indicate that more competition is entering the marketplace especially for highly sought after shopping centres. Private investors have been concentrating on initial yields as the driving force for investment rather than focusing on total returns. Tony Crabb, Savills Research Shopping centre yields as at December 2013 currently range between 5.50% and 7.00% for regional shopping centres, between 7.25% and 9.00% for sub-regional shopping centres, between 7.00% and 10.00% for neighbourhood shopping centres and between 8.75% and 11.00% for bulky goods centres. Typically, yields have softened for bulky goods shopping centres over the year whilst they have firmed slightly for sub-regional shopping centres. National Retail Market Yields by Centre Type (%) Dec-03 to Dec-13 Regional Sub-Regional Neighbourhood Bulky Goods 10% 9% 8% 7% 6% 5% Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Source: Savills Research 10

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12 Savills Research Australian Retail Market Retail Supply & Construction Activity According to figures compiled by the Property Council of Australia (PCA), Australia has 1,360 enclosed shopping centres with a total retail floor space of 17.5 million square metres. The breakdown of Gross Lettable Area (GLAR) by centre type is detailed below. National Centre Stock by Type Regional Sub-Regional N hood Bulky Goods Total GLAR 7,167,956 4,216,705 3,858,134 2,329,718 17,572,513 Number ,360 Average 58,754 17,353 4,476 18,060 % of market Source: PCA Shopping Centre Directory 2013/Savills Research Whilst the PCA directory covers large sections of the retail sector, it is by no means comprehensive. A great many neighbourhood centres, bulky goods outlets and freestanding supermarkets as well as corner stores and street front retail space are not included in the directory. The following tables show selected major retail properties under construction in Australia: New South Wales Select Retail Properties Under Construction Centre Suburb Type New Extension Refurb Comp Wollongong Centre SC Wollongong City Centre 19, Macquarie Centre Macquarie Park City Centre 31, Westfield Miranda Miranda Regional 17, Bunning Rydalmere Rydalmere Bulky Goods 15, Masters Hoxton Park Hoxton Park Bulky Goods 13, Masters Blacktown Michinbury Bulky Goods 13, Bunnings West Gosford Gosford Bulky Goods 13, Liverpool Plaza Liverpool Neighbourhood 8, Super A-Mart Bankstown Bulky Goods 5, Greystanes Shopping Centre Greystanes Neighbourhood 5, Schofields - Woolworths Schofields Freestanding 4, Kiora Land Site Double Bay Freestanding 5,027 8, Stockland Wetherill Park SC Wetherill Park Neighbourhood 11, Martin Pl Commonwealth Bank Building Sydney Other 2, Source: Cordell Reed Construction Data/Savills Research Neighbourhood and smaller sub-regional centres continue to transact across a broad range of yields in line with the characteristics of the individual properties. Tony Crabb, Savills Research 12

13 February 2014 Victorian Select Retail Properties Under Construction Centre Suburb Type New Extension Refurb Comp St James Square Melbourne City Centre 2,900 staged Barkly Square Stage 2 Brunswick Sub Regional 17,462 staged Collins Square, Collins Street Docklands City Centre 10,000 staged Woolworths Shopping Centre Tarneit Neighbourhood 6,000 Nov-13 Coburg Hill N bourhood Hub Coburg Neighbourhood 4,500 Nov-13 Epping Plaza Epping Major Regional 5,000 Nov-13 Woodgrove Shopping Centre Melton Sub Regional 25,000 Dec-13 Craigieburn Town Centre Craigieburn Sub Regional 55,000 Dec-13 Pakenham Lifestyle Centre Pakenham Bulky Goods 31,673 Dec-13 Masters Keysborough Bulky Goods 13,000 Dec-13 The Emporium Melbourne City Centre 47,000 Mar-14 IKEA Campbellfield Campbellfield Bulky Goods 41,000 Mar-14 Brimbank Central Deer Park Sub Regional na May-14 The Strand Arcade Melbourne City Centre 9,498 May-14 The William Melbourne City Centre 2,000 Jun-14 Central Shopping Centre South Morang Neighbourhood 4,600 Dec-14 Source: Cordell Reed Construction Data/Savills Research savills.com.au/research 13

14 Savills Research Australian Retail Market South Australia Select Retail Properties Under Construction Centre Suburb Type New Extension Refurb Comp Churchill Centre Kilburn Sub Regional 19, Costco Kilburn Bulky Goods 14,000* 2014 Gawler Green Evanston Neighbourhood 6,700* 2014 Seaford Meadows SC Seaford Meadows Neighbourhood 6, Source: Cordell Reed Construction Data/Savills Research *Approximate Western Australia Select Retail Properties Under Construction Centre Suburb Type New Extension Refurb Comp Wyatt Grove Shopping Centre Hocking Neighbourhood 5,000 Feb-14 Bassendean Village Bassendean Neighbourhood 2,902 Jun-14 Eaton Fair Shopping Centre Eaton Sub Regional 15,500 Oct-14 Lakeside Joondalup Joondalup Regional 28,300 Nov-14 Carillon City Perth City Centre 2,264 Nov-14 Cockburn Gateway SC Success Sub Regional 20,600 Dec-14 Centro Warnbro Rockingham Neighbourhood 9,486 Dec-14 Wellard Square SC Wellard Neighbourhood 6,285 Jun-16 Source: Cordell Reed Construction Data/Savills Research Queensland Retail Properties Under Construction Centre Suburb Type New Extension Refurb Comp Broadway on the Mall Brisbane CBD City Centre 16,747 Jan-14 Masters Bundamba Freestanding 10,409 Jan-14 Aldi Varsity Lakes Freestanding 2,091 Jan-14 Masters Robina Freestanding 13,500 Feb-14 Northpoint Toowoomba Toowoomba Neighbourhood 7,270 Feb-14 Bunnings West Ipswich Freestanding 11,461 Mar-14 Masters Parkinson Freestanding 13,485 Mar-14 Big Top Shopping Centre Maroochydore Neighbourhood 12,189 Mar-14 Woolworths Shopping Centre Rothwell Neighbourhood 4,932 Apr-14 Costco Northlakes Bulky Goods 14,000 May-14 Indooroopilly SC Indooroopilly Major Regional 30,000 May-14 Aldi West End Freestanding 1,364 May-14 Stockland Hervey Bay Hervey Bay Sub Regional 20,000 Jun-15 Sunshine Plaza Maroochydore Regional 35,000 Jan-16 Westfield Garden City Mt Gravatt Regional 40,000 Jan-16 Pacific Fair Broadbeach Regional 42,700 Jan-16 Source: Cordell Reed Construction Data/Savills Research 14

15 February 2014 Outlook Institutional investors have re-entered the market with freestanding assets and shopping centres high on their investment lists. Furthermore, local conditions have caught the attention of international investors, as good quality; tightly held assets have been available. The retail sector faces both cyclical and structural issues. Some cyclical issues are starting to move in its favour. Consumer confidence is improving, certainly not deteriorating and the cyclical falls in interest rates are certainly helping. Employment is growing strongly in four or five sectors and shrinking in four or five sectors and the jobs gained and lost are not necessarily in the same physical place. This means certain catchment areas are doing it tough and some are doing well. Strong population growth continues to work in the favour of retail turnover and, as the dollar continues to weaken, tourism numbers should start to rise commensurately. The structural issues facing retail are more formidable but not insurmountable. Savills expect the retail sector to evolve to take advantage of the structural issues rather than be over-run by them. The ageing of the population will continue to create challenges for retailers as they jockey for the dollars of retirees. Retirees can be expected to prefer services over goods and will not necessarily continue to dwell in their traditional catchment areas. Internet retailing has already changed the face of retailing for certain categories of goods and will no doubt continue to evolve and challenge more categories over time. New business models are establishing themselves. One of the new business models is a clicks and bricks strategy where the store and the online presence work together to drive sales. This strategy is still in its infancy in Australia. Changes in consumer spending patterns since 2007 appear to have had an adverse effect on department store, apparel and discretionary retailing turnover generally. This has impacted tenants in Regional and some Sub-Regional shopping centres. Lower turnover combined with increasing rents has led to some specialty occupancy costs rising to an average of over 22 percent in Regional Shopping Centres. This is a level that could generally be described as unsustainable and any one or combinations of three things are likely to happen from here. One, occupancy costs fall to a more sustainable level; two, incentives are provided by the landlord to mitigate the high occupancy costs; three, turnover increases as consumers return. In any case, the returns from this sector of retail appear to be constrained for the foreseeable future. Commercial property yields in particular continue to look attractive. The Australian economy is being rebalanced as growth in mining softens. This means housing and retail should continue to lift with positive knock on effects to industrial and office markets. As consumer confidence continues to rise, so should business confidence. As profit margins are restored, business decision making should gain momentum. Some State governments will move into election mode and could be expected to provide some stimulus to parts of the economy providing further momentum to investment markets. China and the United States are forecast to contribute positively to Australia s economic outlook whilst Europe could be on the cusp of a subdued recovery. savills.com.au/research 15

16 Savills Research Australian Retail Market Portfolio Shopping Centre Sales (12 months to December 2013) Date Property Price ($m) GLAR $/sq m Yield (%) May-13 Showg d Village Flemington (75%) 11,054 May-13 Taylors Hill Village (75%) 7,431 May-13 Lilydale Village (75%) 5,452 May-13 Tarneit West Village (75%) 5,020 May-13 Fletcher Village (75%) 4,832 May-13 Katoomba Village (75%) 5,444 May-13 Kellyville Plaza (75%) 5,670 May-13 Coles Port Macquarie (75%) 4,629 May-13 Coles Southgate (75%) 4,681 May-13 West Gosford Shopping Centre (75%) , # May-13 Winmalee Village (75%) 6,012 May-13 Kincumber Village (75%) 5,654 May-13 Northlakes Shopping Centre (75%) 4,828 May-13 Coolum Village (75%) 5,162 May-13 Deeragun Village (75%) 4,336 May-13 Sugarworld Shopping Centre (75%) 4,336 May-13 Kmart Plaza Mt Isa (75%) 9,876 May-13 St Clair Village (75%) 6,467 May-13 Gungahlin Village (75%) 12,244 Source: Savills Research #Estimate Portfolio Shopping Centre Sales (12 months to December 2013) Date Property Price ($m) GLAR $/sq m Yield (%) Jun-13 Ocean Grove Marketplace ,910 4, Jun-13 Alfred Square, Ballarat ,964 2, Jun-13 Target Centre Warrnambool ,984 2, Jun-13 Burdekin Plaza ,513 3, Jun-13 Wyndham Vale Square ,914 2, Jun-13 Langwarrin Plaza ,087 3, Jun-13 Drouin Central ,798 3, Source: Savills Research Portfolio Shopping Centre Sales (12 months to December 2013) Date Property Price ($m) GLAR $/sq m Yield (%) Feb-13 Karingal (50%) 41,249 4,485# Feb-13 Cranbourne (50%) 33,783 3,706# Feb-13 Warriewood (50%) ,153 6,521# 7.49 Feb-13 Mandurah (50%) 33,621 7,835# Feb-13 Halls Head (50%) 5,962 4,935# Source: Savills Research #Book Value 16

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18 Savills Research Australian Retail Market Portfolio Shopping Centre Sales (12 months to December 2013) Date Property Price ($m) GLAR $/sq m Yield (%) Jun-13 Bankstown (50%) 79,611 7,223# Jun-13 Roselands (50%) 59,852 5,577# Jun-13 Toormina (50%) 20,833 6,288# Jun-13 Lennox (50%) 9,490 5,005# 7.42 Jun-13 Sunshine Marketplace (50%) 33,812 2,396# Jun-13 Karratha (50%) 22,871 4,463# Source: Savills Research #Book Value New South Wales Select Major Shopping Centre Sales (12 months to December 2013) Date Property Price ($m) GLAR $/sq m Yield (%) Feb-13 Fairfield Forum ,954 1, * Feb-13 Kings Cross Centre ,432 5, Feb-13 Castle Hill Homemaker Centre ,365 1, May-13 Erina Fair (50%) ,291 7,764# * Jun-13 Armidale Plaza ,743 1, Jun-13 Wattle Grove Plaza ,305 5, * Jun-13 Federation Woodcroft ,667 4, Jun-13 Manning Mall ,495 3, Jul-13 Auburn Home Mega Mall ,341 1, Sep-13 Menai Central ,798 2,917 na Sep-13 Home HQ North Shore ,186 3, Oct-13 Oxford Square ,088 5, Nov-13 Harbourside Shopping Centre ,542 12, Nov-13 Lake Innes Village ,229 4, Nov-13 Supa Centre Belrose ,053 2, Nov-13 Federation Seven Hills ,502 4, * Nov-13 HomeBase Prospect ,018 1,617 na Dec-13 Carlingford Court ,366 6, Source: Savills Research *equated yield #rate per sq m reflects 100% of GLA na = not currently available 18

19 February 2014 Queensland Select Major Shopping Centre Sales (12 months to December 2013) Date Property Price ($m) GLAR $/sq m Yield (%) Feb-13 Bluewater Square, Redcliffe ,067 4, Apr-13 Federation Gympie ,054 4, Apr-13 Rochedale Shopping Centre ,740 3, Jul-13 Homemaker City Fortitude Valley ,271 2, Jul-13 Great Western Super Centre ,387 4, Jul-13 Kmart Plaza, Toowoomba 55.00# 13,045 4, Jul-13 Logan Mega Centre ,000 1, Jul-13 Deception Bay Shopping Centre ,583 1, Jul-13 Inala Plaza ,438 1, Oct-13 Redbank Plains Shopping Centre ,945 3,532 na Oct-13 Ashmore City Shopping Centre ,780 4, Oct-13 Wilsonton Shopping Centre ,683 2,638 na Nov-13 Beenleigh Market Place ,111 4, Source: Savills Research na = not currently available #excl excess land Victoria Select Major Shopping Centre Sales (12 months to December 2013) Date Property Price ($m) GLAR $/sq m Yield (%) Jan-13 Mernda Village ,200 4, Feb-13 Keilor Downs Plaza ,782 3, Feb-13 Hogans Corner ,568 4, Mar-13 Greensborough Plaza ,850 6, May-13 University Hill, Bundoora ,647 4, * Jun-13 Bacchus Marsh Village ,147 2,086 na Jun-13 Healesville Walk ,971 4, Jul-13 Home HQ Nunawading ,871 2, Oct-13 Lynbrook Village ,811 4, Oct-13 House & Home Moorabbin ,883 2,269 na Oct-13 Rosebud Plaza ,847 4, Source: Savills Research na= not currently available *Equated Yield savills.com.au/research 19

20 Savills Research Australian Retail Market South Australia Select Major Shopping Centre Sales (12 months to December 2013) Date Property Price ($m) GLAR $/sq m Yield (%) Feb-13 Paralowie ,560 2, Aug-13 Fairview Green ,645 3, Oct-13 Southgate Plaza ,844 3, Nov-13 Burbridge ,307 2, Source: Savills Research West Australia Select Major Shopping Centre Sales (12 months to December 2013) Date Property Price ($m) GLAR $/sq m Yield (%) Jan-13 Plaza Arcade ,322 20, Feb-13 Claremont Quarter, Claremont (50%) ,000 11, Feb-13 Phoenix Park, Spearwood ,543 3, Apr-13 Melville Plaza ,964 3, May-13 Rockingham Superstore ,608 1, Jun-13 Secret Harbour 33.20# 5,574 4, Jun-13 Kelmscott Plaza ,079 2, Sep-13 Karrinyup (33.3%) ,852 13, Oct-13 Harbour Town (50%) ,238 9, Oct-13 Bunbury Forum ,353 6, Nov-13 Brighton Village ,846 5, Source: Savills Research na = not currently available #incl. excess land 20

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22 Savills Research Australian Retail Market National +61 (0) Head of Research Tony Crabb ACT +61 (0) Research Simon Hemphill Sales and Leasing Phil Harding Project Management Mitchell Thomas NSW +61 (0) Research Simon Hemphill Valuations Andrew Johnston Capital Transactions Ian Hetherington Metro Sales Robert Lowe Asset Management - Retail Thomas Brown Sales Steve Lerche Retail Leasing Leighton Hunziker Project Management David Nicholas QLD +61 (0) Research Paul Day Valuations Lawrence Devine Capital Transactions Anthony Ott Sales Peter Tyson Retail Leasing Garry McDowall Asset Management - Retail Murray Scanlan Sunshine Coast Dustin Welch Gold Coast Kevin Carmody Project Management Gary Finnegan SA +61 (0) Research Hamish Johnston Valuations Adrian Rowse Capital Transactions Peter Isaakson Sales Steve Bobridge Asset Management - Retail Tony Bruno Retail Leasing Peter Isaksson Project Management Steve Christodoulou VIC +61 (0) Research Glenn Lampard Capital Transactions Dominic Long Retail Leasing Michael Di Carlo Asset Management - Retail Egan Smith Valuations Stuart Fox Project Management Chris Adam WA +61 (0) Research Gemma Alexander Valuations Mark Foster-Key Capital Transactions Miles Rowe Metro Sales Chas Moore Retail Leasing Chris Ireland Asset Management - Retail Jason Ridge Project Management Graham Nash 22

23 February 2014 Savills Research Team Our highly regarded research division are dedicated to understanding and giving in-depth insight into the commercial, industrial & retail markets throughout Australia. We also provide in-depth consultancy services, ranging from tenant representation to property site selection for multinational businesses. Our research teams are highly qualified real estate professionals with comprehensive knowledge of property markets across Australia. The Savills Research & Consultancy team has years of experience, and supported by our extensive agency, property management and valuation professionals, are highly regarded and respected along with Savills Research teams across the globe. Savills provide free research reports on all major property markets, and some example papers include: ÎÎ Office Markets ÎÎ Retail Markets ÎÎ Residential Trends ÎÎ Industrial Markets ÎÎ International Markets For our latest reports, contact one of the team or visit savills.com.au/research Download the Savills App for insights at your fingertips Savills Research South Australia Quarter Times Adelaide Industrial Q4/2012 Savills Research Western Australia Savills Research Victoria Quarter Times Melbourne Retail Q4/2012 Quarter Times Perth Office Q4/2012 Savills Research New South Wales Quarter Times Sydney Residential Q4/2012 This information is general information only and is subject to change without notice. No representations or warranties of any nature whatsoever are given, intended or implied. Savills will not be liable for any omissions or errors. Savills will not be liable, including for negligence, for any direct, indirect, special, incidental or consequential losses or damages arising out of our in any way connected with use of any of this information. This information does not form part of or constitute an offer or contract. You should rely on your own enquiries about the accuracy of any information or materials. All images are only for illustrative purposes. This information must not be copied, reproduced or distributed without the prior written consent of Savills. savills.com.au/research 23

24 Savills is a leading global real estate service provider listed on the London Stock Exchange. The company, established in 1855, has a rich heritage with unrivalled growth and has been ranked No.1 by turnover in the UK by the Estates Gazette for ten consecutive years. Savills is a company that leads rather than follows and now has over 500 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. Across the Asia Pacific, Savills have over 45 offices in Australia, New Zealand, Singapore, Malaysia, Thailand, Vietnam, Hong Kong, Macao, China, Taiwan, Korea and Japan. Savills Australia specialises in the provision of industrial, commercial, retail and residential property services across the country. We are recognised as established leaders within the Australian property markets and deliver a seamless service both locally and throughout our global network of offices. A unique combination of sector knowledge and entrepreneurial flair gives clients access to real estate expertise of the highest calibre. We are regarded as an innovative, thinking organisation cemented by the best people with excellent negotiation skills. Savills focus on a defined set of clients, offering a premium service to organisations and individuals with whom we share a common goal. Contact Savills for advice on all aspects of property: n Sales and Leasing n Corporate Advisory n Asset Management n Property Accounting n Valuations n Residential Services n Project Management n Research Adelaide +61 (0) Brisbane +61 (0) Canberra +61 (0) Gold Coast +61 (0) Melbourne +61 (0) Notting Hill +61 (0) Parramatta +61 (0) Perth +61 (0) Sunshine Coast +61 (0) Sydney +61 (0) savills.com.au