Australian CY24 Retail Transactions Overview & ’25 Outlook - JLL Retail. Introduction and CY24 Overview.

By Mr Nick Willis, Senior Director of JLL Retail Investments Australia & New Zealand and Mr Sam Hatcher, Head of JLL Retail Investments Australia & New Zealand. 

2024 was a foundational year for retail property within Australia given a notable shift in capital appetite toward the sector and several emerging trends that point to heightened demand, greater bidder depth and yield tightening in some retail sub-sectors. 

Year-end transaction volumes reached AUD8.4 billion in 2024, illustrating a 35% increase YoY and a 7% increase on the prior 10-year average. The retail sector has continuously provided strong liquidity with over $7bn in annual transactions 8 out of the last 10 years. 

The first quarter of any year is typically the slowest & lowest for deal flow, however, 2024 was further off the pace, recording only 11% of yearly deal volume which is the lowest since 2021 and below the 10-year average.

However, investor appetite continued to grow over 2024, given the sound fundamentals of retail property that industry insiders have talked about for the preceding half decade is now starting to be confirmed by real-time data. This directly translates to deeper engagement from capital, however, more interestingly the greatest variation in active capital has been from local wholesale institutions and large offshore investment houses. 

Despite this renewed interest from institutional groups, Syndicator capital remained the most active in 2024, accounting for 38% of total transactions by dollar value, followed by Institutional investors reflecting 29% (combined across Listed REIT, Wholesale Funds, and Offshore) and then Private Investors representing 25% of total deals. 

Syndications within the Australian retail market have continued to grow and are taking on larger deals as a result to maintain growth, this has led to the 2024 transaction volumes by this cohort to remain significantly elevated relative to the prior 5-year average (up 61% on the prior 5-years). For comparison 2024 volumes are up only 7% on the prior 5-year average.

Historic Australian Retail Transaction Volumes & Deal Flow

Most active capital groups in ‘24

Unsurprisingly, the top three sellers in retail were wholesale and listed REITs. However, Vicinity had recycled part of their $767 million in divestments into Lakeside Joondalup ($420 million), a core addition to their portfolio. 

Other groups such as Dexus and QIC completed some marquee divestments including the sale of Willows Shopping Centre for $212 million, 50% of Westfield Tea Tree Plaza for $309 million and Westpoint Blacktown for $870 million.

The privately run Perron Group ranked in No. 4 position with the divestment of 50% interests in Cockburn Gateway and Belmont Forum to GPT’s Wholesale Shopping Centre Fund (GWSCF)– resulting in GPT also featuring in the top Buyers list and demonstrating the return of wholesale capital for retail. 

On the buyside, the top four positions were all syndicator capital groups. This included the newly-formed Scentre Group & Barrenjoey Joint Venture which capitalised on the partial sales of Scentre Group’s existing assets and illustrating how REIT’s are looking to enter the syndication space. 

Mr Nick Willis, Senior Director of JLL Retail Investments Australia & New Zealand, said, "Over 2024, Australia's retail market experienced a resurgence of optimism, driven by the renewed interest of local REITs and wholesale funds, following several years of subdued activity. The sector's improving global narrative underwritten by strong fundamentals and positive tailwinds drew in maiden capital and outlined a growing increase in offshore engagement.”

Mr Willis continued, “We saw a notable rise in interest from a diverse range of investors. This influx of new market participants intensified competition for high-quality assets, resulting in a 30% increase in bidder participation across our campaigns. We expect this to continue into 2025, in particular from offshore funds in this weakened Australian Dollar environment, particularly from US domiciled funds.”

Mr Willis outlined the capital landscape, stating “Syndicators solidified their position as the dominant capital source, contributing to 40% of all retail transactions. Active managers such as Fawkneracquired over $1billion in 2024 securing assets such as Figtree Grove and Willows Shopping Centre. We will continue to see this trend in 2025, however, now with more competition from the institutional market.”

Net buyer analysis

Unsurprisingly, Syndicator capital reflected the strongest net acquisition position in 2024 (+$2.6 billion). This followed by Private Investors (+$800 million) and Owner Occupiers (+$159 million). 

As the syndicator groups continue to acquire larger assets, we are witnessing a shift of capital sourcing away from their private wealth to institutional partnerships. Over the last 5 years we have seen this buyer cohort acquire approx. $11.6billion, capital raising the majority of funds from the private wealth markets. 

Owner Occupiers were an interesting buyer group in 2024. Asset acquisitions by supermarkets and LFR tenants reflected the strongest increase in activity driven by the heightenedinability to develop and secure locations in tightly held markets. 

Top buyers and sellers of each retail sub-sector

’24 – a year of partial interest transactions

CY24 was a substantial year of non-management and partial interest trades. These transactions provided groups (mainly syndicators) high cash flow distributions and access into core holdings that have previously remained in institutional ownership. 

Despite this heightened partial share activity, there remains a focus from capital for control and/or a line-of-sight to management – however, availability of these holdings arerestrained given the high barriers of entry controlled by existing owners unwilling to divest. 

As the market entered 2H24, Australian institutional groups have turned their focus away from divestments and into a capital light model pursuing new capital partnerships as a way to bring in liquidity whilst retaining management of key assets. This is a trend that will continue throughout 2025 and as a result will likely limit the formal on-market supply of shopping centres offered for sale. 

CY25 forward look

Whilst it’s difficult to predict future market movements the key themes that emerged in 2024 and carrying over into 2025 are summarised below. The major takeout being there is a greater depth of capital and reduced forecast supply for sale creating pricing tension. 

Mr Sam Hatcher, Head of JLL Retail Investments Australia & New Zealand, stated, "The anticipated rental growth story arrived in 2024 with LFR and Sub-Regional rents being most pronounced at 4.8% and 3.6% respectively. As a result, owners of existing centres who are experiencing this growth within their portfolios continue to be the most dominant buyers in the market.

Whilst newer entrant capital is hovering across the sector and awaiting data sets, that existing owners are experiencing in real time, before deploying. In a supply starved market, we expect rental growth will drive capital engagement leading to more demand and as a result will be the ultimate driver of yield compression in 2025.”

Mr Hatcher went on to note, “Exacerbating this is the sheer lack of new built form retail, in Sydney only 39,200sqm of retail was developed in 2024, the lowest level since 1989. Our analysis across the sub-sectors, is that economic rents would have to grow between 20% and 40%, dependant on the asset class, to support new feasible retail development to meet the burgeoning population growth.”