Industry operators are being affected by poor retail conditions
Melbourne, Australia (PRWEB) January 04, 2013
Poor consumer confidence, fierce competition from online shopping and an oversupply of retail property are the challenges currently faced by retail property operators. The retail property market showed signs of improvement in 2010-11 after a soft period during the downturn in the Australian economy. However, retail conditions faltered somewhat in late 2011-12 as global economic uncertainty weighed on consumer spending, and this has continued into 2012-13. According to IBISWorld industry analyst Tim Stephen, “while occupancy is good as a result of leasing incentives and low rental prices, property values are flat”. In its updated report, IBISWorld estimates revenue for the Retail Property Operators industry will decline slightly over the five years through 2012-13, at a compound annual rate of 0.1% to reach $30 billion.
The industry is primarily made up of individual investors, property syndicates and smaller property groups and trusts. “This indicates that the market is not dominated by any individual company, but is rather driven by many different players”, says Stephen. The two largest players in the industry are Westfield Group and CFS Retail Property Trust.
The main problem currently facing the Retail Property Operators industry is low demand as a result of weak consumer confidence. This is resulting in low retail sales, which subsequently results in low demand for retail space. Operators have dropped prices and offered incentives such as rent-free periods, but anchor tenants such as department stores have begun decreasing their demand for space. To keep occupancy rates up, retail operators are expected to forego short-term profit. These effects have been accentuated by a growing proportion of consumers buying goods online, negating the need for retail space.
The problems will continue into the early part of the next five years. However, as the economy slowly rebounds, retail spending will rise as deleveraged consumers benefit from higher disposable incomes and more stable economic conditions. The oversupply of retail space is expected to persist well into the period, but will correct earlier if the economy recovers ahead of what is currently forecast, and if this occurs large-scale developments will take place within the period.
For more information, visit IBISWorld’s Retail Property Operators report in Australia industry page.
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IBISWorld industry Report Key Topics
The industry is made up of companies engaged in the leasing of retail property.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.