A hard sell: Retail real estate has laboured in Australia amid middling economic progress, but pockets of strength exist
Australia largely was spared the ravages of the global financial crisis but, despite record-low interest rates, shoppers are cautious. They are worried the tame economic recovery elsewhere in the world, combined with an economic slowdown in China, finally is going to affect the economy at home. That caution, in turn, is afflicting local retail developers and landlords.
International retailers, however, have become more aggressive in their Australian expansion plans. International investors also have come calling. With this dichotomy, who is right?
Unlike residential property, which some critics say is reaching bubble status in Australia’s two largest cities, performance has been sluggish for shop space. Rents experienced a small drop in both Sydney (down 0.2 percent) and Melbourne (down 0.5 percent) in the past 12 months, according to JLL. Sydney retail now costs A$1,933 (US$1,427) per square metre per year. Rates in Melbourne a