6.0 Comparison
with Other Classes of Built Asset

Additionally, through
the comparison of industrial property and office property market, investing in
retail property is a wise decision. According to JLL (2017), the Brisbane and
Adelaide Central Business District vacancy rates of office property were both
nearly 16 per cent as well as the vacancy rates were nearly 7 per cent in
Melbourne and Sydney in the December of 2017. It also explained its yields
fluctuated between 5% and 6% in Australia. The high vacancy happened in
Brisbane and Adelaide because the supply of office property is over the demand
in the market. As Commercial Property Outlook (2017) explained, 25% of
Brisbane’s office properties were employed by companies servicing mining in the
past. However, along with the continuing loss of demand from mining industries,
the rental of office property grows slowly in most Australian cities such as
Brisbane and Perth. Furthermore, according to JLL (2017), the rental of Industrial
property increases slowly in Australia and its yields range from 6% to 7%.
Meanwhile, Commercial Property Outlook (2017) indicated that the opportunity of
strong investment return from industrial property are going to disappear. There
is no shortage of market demand for the long leases or high-quality properties
because the current development is running close to the market demand. As well
as this, availability of development land and development competition restrict
the property value and rent growth. Thus, it is not suitable for investing now.

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Contrarily,
the retail property sector performed strong development in 2017 because higher
demand from retailers and consumers pushed vacancy rates lower and improved the
rental growth. Meanwhile, they also promoted the retail property investment
market. As Colliers International (2017) stated, the average retail vacancy was
below 5% and average yields was about 7.5% in Australia. Therefore, comparing
with the current market conditions in office and industrial investment
property, retail property still remains attractive from an investment
perspective.

7.0 Challenges in Retail
Real Estate Investment

On
the other hand, although retail real estate remains attractive and demand
growth is stable, there are still many challenges in this investment.
Additionally, as development of information technology has accelerated in
recent decades, it also affects global real estate economies. For example, the
entrance of Amazon into Australian retail market has negative influences on
Australian retail property investment. According to Colliers
International (2017), Amazon can slow
the store expansion for retailers and produce some stress on rents because
existing retailers focus on strategies to minimise loses in profitability and
maintain market share. For this reason, the fast development of e-commerce not
only has negative influences on national retailers but also affects investors’
investment confidence.