6.0 Comparisonwith Other Classes of Built AssetAdditionally, throughthe comparison of industrial property and office property market, investing inretail property is a wise decision. According to JLL (2017), the Brisbane andAdelaide Central Business District vacancy rates of office property were bothnearly 16 per cent as well as the vacancy rates were nearly 7 per cent inMelbourne and Sydney in the December of 2017. It also explained its yieldsfluctuated between 5% and 6% in Australia. The high vacancy happened inBrisbane and Adelaide because the supply of office property is over the demandin the market.
As Commercial Property Outlook (2017) explained, 25% ofBrisbane’s office properties were employed by companies servicing mining in thepast. However, along with the continuing loss of demand from mining industries,the rental of office property grows slowly in most Australian cities such asBrisbane and Perth. Furthermore, according to JLL (2017), the rental of Industrialproperty increases slowly in Australia and its yields range from 6% to 7%.Meanwhile, Commercial Property Outlook (2017) indicated that the opportunity ofstrong investment return from industrial property are going to disappear. Thereis no shortage of market demand for the long leases or high-quality propertiesbecause the current development is running close to the market demand.
As wellas this, availability of development land and development competition restrictthe property value and rent growth. Thus, it is not suitable for investing now.Contrarily,the retail property sector performed strong development in 2017 because higherdemand from retailers and consumers pushed vacancy rates lower and improved therental growth. Meanwhile, they also promoted the retail property investmentmarket. As Colliers International (2017) stated, the average retail vacancy wasbelow 5% and average yields was about 7.
5% in Australia. Therefore, comparingwith the current market conditions in office and industrial investmentproperty, retail property still remains attractive from an investmentperspective.7.0 Challenges in RetailReal Estate InvestmentOnthe other hand, although retail real estate remains attractive and demandgrowth is stable, there are still many challenges in this investment.Additionally, as development of information technology has accelerated inrecent decades, it also affects global real estate economies.
For example, theentrance of Amazon into Australian retail market has negative influences onAustralian retail property investment. According to ColliersInternational (2017), Amazon can slowthe store expansion for retailers and produce some stress on rents becauseexisting retailers focus on strategies to minimise loses in profitability andmaintain market share. For this reason, the fast development of e-commerce notonly has negative influences on national retailers but also affects investors’investment confidence.