VIC MARKET OVERVIEW
VICTORIA
Tim McIntosh - National Director, Retail Middle Markets | Colliers
year low, there has been a marked increase in off-shore buyer activity. Colliers Asia Markets team is regularly bringing new retail mandates, ranging from $5 million to over $100 million. We anticipate further capital inflows from off- shore, particularly from China. From a developer’s perspective, what opportunities exist in your market, and how should they be positioning themselves to capitalise on these opportunities in 2025? In the last 24 months, we have seen limited core retail development sites offered to the market, particularly those with permits located within strong population catchments with an undersupply of retail opportunities. Developers have particularly sought these kinds of opportunities as they seek retail prospects with limited holding costs and retailers ready to go. Colliers is working on several retail sites with these characteristics and anticipates positive engagement from developers who are prepared to act. Based on discussions with vendors and potential vendors, how are they observing market dynamics in your region, and to what extent do you expect an increase in properties coming to market this year? Since the second half of 2024, we have observed an upward trend in enquiry and buyer engagement across all retail sectors in Victoria, with Q4 2024 being particularly active with deal volume. Some vendors have recognised this and are capitalising on the imbalance between the scarce supply and a deeper buyer pool as investor confidence continues to spread throughout the retail market.
Looking ahead to 2025, what’s your outlook for the commercial property sector, considering economic conditions, interest rate trends, and investor sentiment? What we are seeing nationally across Colliers Retail Middle Markets team, which has carried through from H2 2024 to the very start of 2025, is an increased depth of capital and renewed optimism from investors and developers across all retail sub-sectors. A growing number of new retail and long-term investors have active mandates to acquire retail assets, partly driven by a positive outlook in terms of the ongoing trading performance of retailers and positive rental growth. At the same time, at a macro level, investors are buoyed by a lower interest rate environment and lower returns across short-dated term deposits. In 2025, we have already fielded higher and more genuine enquiry levels on current campaigns than we experienced in the last two years. This is partly prompted by economic stability, with inflation realigning with targets, while a more significant focus is on the strength of retail sales. Interestingly, long- established family offices are less focused on when the first interest rate cut will be and more interested in the tailwinds of what a lower interest rate environment over the next 24 months represents for increased returns. Reflecting on conversations with buy-side clients, what’s their sentiment, and which buyer profiles do you anticipate will be most active this year? With the Australian exchange rate at a five-
TIM MCINTOSH
44 – February / March 2025
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