Fast growing investor JY Group has outlaid $167 million for a 50% interest in Roselands Shopping Centre in Sydney’s south-west.

CBRE’s Head of Retail Capital Markets, Pacific, Simon Rooney negotiated the off-market sale on behalf of CIP Asset Management, amid a surge in buyer interest in shopping centre investment opportunities.

Mr Rooney noted that almost $4.52 billion had flowed into Australian retail investments in Q2 and Q3, up 118% on the same period last year and markedly ahead of the comparative spikes in office and industrial transactions (which were up 88% and 87% respectively).

That momentum has continued into Q4, with yesterday’s announcement that UniSuper and Cbus Property have partnered with AMP Capital to take majority ownership of Pacific Fair on the Gold Coast and a half stake in Sydney’s Macquarie Centre in a $2.2 billion deal.

“Retail is the real mover at present, with at least another $2 billion in assets expected to change hands this year,” Mr Rooney said.

“The comparative returns and value proposition is clearly compelling, with major owners now able to competitively rebalance portfolios, allowing incoming investors to strategically acquire some of Australia’s best retail assets. This return of institutional capital into the sector, combined with strong private investor demand, will see heightened transactional activity into 2022.”

JY Group already owns three Melbourne shopping centres, having teamed with Mulpha Australia to acquire Brimbank Shopping Centre for $153 million in 2019, before joining with property funds manager Haben to purchase Casey Central from M&G and Stockland The Pines for $225 million and $155 million respectively.

Mr Rooney noted that Roselands’ strong performance, track record and future value-add, mixed-use development potential had been key buyer drawcards.

“Roselands provided an extremely rare and highly sought-after opportunity to acquire a stake in a Sydney metropolitan-based regional shopping centre,” Mr Rooney said.

“JY Group strategically acquired the asset off-market prior to a formal campaign commencing, with the price reflecting a material premium to the most recent external book valuation and a continuing shift in investor sentiment towards premium retail investment opportunities.”

Roselands Shopping Centre was one of Sydney’s first regional shopping centres and was the largest in the southern hemisphere on its completion in 1965. It is situated just 16 kilometres south-west of the Sydney CBD.

“Located within an extensive and well-established trade area, it provides an immediate opportunity to create a truly mixed-use town centre precinct, given the sizeable site area of 14.3ha, prominent metropolitan location and ready access to public and private infrastructure.”

The existing centre has a gross lettable area of 63,344sqm, anchored by national retailers Myer, Woolworths, Coles, Aldi and a new Kmart discount department store, which recently replaced Target.

Mr Rooney noted that the centre had recently benefitted from a $90 million redevelopment and significant upgrade to the ground floor fresh food precinct, known as ‘The Markets’, comprising new fresh food and specialty food retailers, a new Aldi, a refurbished Coles and a new Woolworths.

Combined the three supermarkets generate more than $140 million in annual turnover, supported by robust performing specialty tenants demonstrating considerable month-on-month growth following the recent redevelopment.

The centre services a well-established and densely populated trade area of 481,260, projected to increase to 530,970 persons by 2031, with significant retail spending capacity of $6.5 billion, including $1.1 billion in the PTA, with forecast growth of 3.3% p.a., to reach $9.0 billion by 2031.

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