A shopping centre in Woy Woy, New South Wales anchored by retailers Coles and Kmart has been sold to a private investor for $111 million.
The Deepwater Plaza, situated around 84km north of Sydney, was sold on behalf of a Dexus (ASX: DXS) managed fund on a core capitalisation rate of 6.5 per cent, representing increased demand for convenience-focused, sub-regional centres according to real estate agent CBRE.
The sale of Deepwater Plaza follows disposals of Shepparton Marketplace in Victoria for $88.1 million and Beenleigh Marketplace in Queensland for $85 million in 2022 - both of which were negotiated off-market by CBRE.
“This transaction demonstrates the shift in investor focus and renewed demand for sub-regional centres, specifically for assets with a clear focus on non-discretionary spending and genuine value-add opportunities,” said CBRE head of retail capital markets Simon Rooney, who negotiated the sale of the Central Coast property.
“Investors were attracted by Deepwater Plaza’s robust major tenant and overall sales performance, coupled with the centre’s strong specialty productivity of $10,007/sqm and sustainable occupancy cost of 11.5 per cent.”
The 17,417sqm Woy Woy centre is positioned on a strategic 42,910sqm freehold site adjoining Woy Woy railway station, and benefits from a favourable planning scheme offering both immediate and longer-term value-add opportunities via re-leasing and mixed-use development avenues.
The deal is the latest shopping centre sale for 2023, and comes after Australian Prime Property Fund (APFF) sold Craigieburn Central for $300 million.
An offshore buyer was also keen on a slice of the suburban shopping centre market via the purchase of Ormeau Village in the booming Brisbane-Gold Coast corridor for $37 million in March.
It also comes as retailers are moving through a challenging economic environment, with Vicinity Centres (ASX: VCX) recently warning that growth in the segment will moderate as cost-of-living pressures begin to bite for the remainder of the year.
“While retailer confidence and retail sales growth remained robust during the quarter, our outlook for 4Q FY23 and into FY24 remains cautious due to the ongoing escalation of household living costs and the potential for consumption to soften,” Vicinity CEO Peter Huddle said on announcing the company’s third-quarter results.
“The Australian retail sector has once again demonstrated its resilience in the face of rising household costs and heightening near-term macroeconomic uncertainty.”
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