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The end of 2019 brought huge commercial property deals to light – think Charter Hall’s purchase of $840 million worth of BP petrol stations. According to the AFR, lower interest rates will fuel similar purchases in 2020. (22/01/20, Ingrid Fuary-Wagner – Low rates fuel ‘explosion of property deals) This could include ‘alternative’ real estate investments including student accommodation, hotels and childcare centres. In the AFR, Cushman & Wakefield’s head of research wrote that sharp yields in the traditional commercial property asset classes are encouraging value in alternate sectors. Investment in these sectors jumped to $8 billion in 2019, and this is likely to continue rising. (22/01/20, Ingrid Fuary-Wagner – Investment in ‘alternative’ real estate surges to $8b) Retail Unfortunately, this surge is not being seen in Australia’s retail sector. The Age reported that 2020 has already seen an “unusually high” number of retailers close or collapse and this is likely to incur a flow-on effect to others. Despite, a lift in sales during November thanks to Black Friday, December was a disappointing month to round off a slow year. Companies who were relying on a successful December are likely those who are struggling now. (20/01/20, Dominic Powell – Unprecedented number of store closures could hit landlords and other retailers) This was well illustrated by the surprising news that German retailer Kaufland will exit the Australian market on Wednesday. The AFR reported that this came as a shock to many people including employees. The company stated that it would be focusing on key European markets instead, although some experts believed that the flailing retail sector in Australia was a contributing factor to their exit. (22/01/20, Sue Mitchell – ‘No warning’ as Kaufland pulls plug on Australia) As a result, 200 jobs will be lost. Supermarkets already established in Australia, however, were not disappointed with the news, as their share prices rocketed. Woolworths saw an increase of 3.3%, so the impact on the economy is not set in stone for now. (22/01/20, Melissa Yeo – Consumer staples push ASX higher as Kaufland backs away) Read about the impact of this withdrawal on Australian landlords at The Urban Developer: Kaufland Withdrawal Leaves Landlords in the Lurch.
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