JLL Research reveals that retail investments in New South Wales continue to be highly sought-after, with the state's transaction volumes surpassing the rest of the country by more than 15% in 2024, driven by strong population growth and robust consumer spending.

This trend is particularly evident in the supermarket-anchored asset class, which has seen 13 transactions this year, bringing the total value of freestanding supermarket and neighbourhood centre deals to $415 million.

The market's strength is exemplified by JLL's recent off-market sale of Coles Tumut in regional New South Wales. Transacted for $12.9 million to a Victorian private investor, this deal marks the first freestanding supermarket to trade in NSW in 2024. It's part of a series of transactions handled by JLL, being the fourth freestanding supermarket sold by the team in the past six months, totalling $65 million.

JLL’s David Mahood, Sebastian Fahey and Stuart Taylor handled the off-market divestment.

Mr Mahood, Senior Executive Retail Investments – NSW, said “In a year marked by heightened off-market activity, retail investments in New South Wales continue to be highly sought-after. Despite broader economic pressures, supermarkets continue to demonstrate remarkable resilience and attractiveness to investors.”

He added, “As cost-of-living concerns persist, the non-discretionary nature of supermarket spending has underpinned strong productivity and sales growth in this sector, drawing significant capital interest even in the persistent high interest rate environment."

Mr Fahey, Senior Executive Retail Investments – NSW, said “Supermarket-anchored assets in New South Wales continue to dominate investor mandates. Our team has seen a surge in first-time investors entering the New South Wales retail sector, acquiring more than $160 million worth of centres in 2024.”

He added, “Investor confidence in the sub-sector's income stability is evident. This, combined with Australia's projected population growth and a dwindling supply pipeline for supermarket-anchored investments, presents a compelling case for future rental growth across the sector."

JLL’s research shows relative yield stability over the past two years, with only a 104-basis point expansion from peak 2022 levels.

Mr Mahood concluded “Supermarket-anchored investments are anticipated to remain at the forefront of investors' minds as a highly desirable asset class. The sector's resilience in the face of economic challenges, coupled with its potential for stable returns and capital growth, positions these assets as an attractive proposition in the current market landscape."

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