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Colliers International’s Capital Markets Investment Review shows positive outlook for 2021

Colliers International’s Capital Markets Investment Review was released this week shows investment sales across the Office, Industrial, Retail and Hotels sectors, rebounded strongly in the second half of the year, due to Australia’s management of the pandemic.

The Investment Review found that despite the major disruption during 2020 due to the pandemic, the outlook for Australian property investment in 2021 is positive.

John Marasco, Managing Director, Capital Markets and Investment Services said, “Many major deals ground to a halt in March 2020, while investors and vendors assessed the impact the pandemic would have on income, in the short term and longer term.”

“However, the International Monetary Fund predicts that the Australian national economy, will bounce back more quickly, relative to other developed countries; national GDP rose 3.3% in the September quarter and NAB’s index of business confidence jumped by 9 points in November 2020.”

“These figures, coupled with Australian Consumer Sentiment hitting a 10-year high in December 2020, and a lower than expected unemployment rate of 6.8%, suggests the outlook for 2021 appears to be improving.” said Marasco.

$4.26 billion in retail assets transacted in Australia throughout 2020, down 39% on the previous year and representing the lowest total transaction value for the retail investment market.

The highest level of retail investment activity in 2020 was recorded in the Neighbourhood sub-sector; 35 neighbourhood assets transacted for a combined total $1.50 billion equating to approximately 35% of the total retail investment market by dollar value.

Lachlan MacGillivray, Head of Retail Investment Services at Colliers International said, “In the early months of the pandemic, the implementation of the Code of Conduct for Commercial and Retail Tenancies had a substantial impact on rent collections for retail landlords.”

As a result of these risks, transaction volumes were impacted significantly during the second quarter – with deal-flow only starting to improve in the third and fourth quarters, as rent collections appeared to be recovering and most of the Code of Conduct requests were finalised.”

“Neighbourhood and large-format retail centres were favoured by investors for their stable income streams and accounted for over half of the sales in 2020.”

“Institutional investors were the most active purchaser group by dollar value, accounting for 52% of total retail transactions, a slight increase year on year from 41% in 2019.”

“We expect a significant increase in major asset transactions >$150 million in 2021. The return of stabilised trading conditions, complimented by attractive relative value return metrics and limited key opportunities will be a big market driver.” said MacGillivray.

The full report can be downloaded here.

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