Poor consumer confidence, competition from online retailers and a glut of retail property challenge the industry
Melbourne, Australia (PRWEB) June 26, 2013
Poor consumer confidence, fierce competition from online shopping and an oversupply of retail property are the challenges currently facing the Retail Property Operators industry in Australia. IBISWorld industry analyst Tim Stephen states “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 in late 2011-12 as global economic uncertainty weighed on consumer spending. This has continued into 2012-13 with industry revenue estimated to rise 0.9%. While occupancy is good, due to leasing incentives and low rental prices, property values are flat. 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 $30.0 billion.
According to Stephen, “the main problem currently facing the industry is low demand resulting from weak consumer confidence. This is leading to 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. Problems for the Retail Property Operators industry 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 current forecasts.
The Retail Property Operators industry consists major players Westfield Group and CFS Retail Property Trust and 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. Market share concentration levels had been slowly increasing up to 2007-08. However, the global financial crisis negative affected the market. Concentration is expected to grow over the next five years as more retailers look to take risky property assets off their balance sheets in favour of renting. While overall industry concentration is low, in the shopping centre property segment it is much higher. This is unsurprising given the large investment required to develop and manage a shopping centre. Between the big Australian real estate investment trusts, competition is fierce. Some specialise in retail property, while others invest in commercial property, and others commercial and industrial. 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
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