ReSourceData's tracking of institutional property sales data suggests that we haven't yet seen the peak of the market. Transactions across each of the commercial, retail, industrial and development sectors was typically quieter after the new year break but the value of sales in Q1, 2019 was higher than the previous two 1st quarter periods of 2017 and 2018 - Thanks to Dexus.
Dexus' $2.1bn investment in MLC Centre and 80 Collins Street helped push the Q1 sales to new heights, and without these, sales would be below 2018 levels and in line with 2017 results.
CMA recorded 162 transactions totaling $6.27bn in Q119 compared to 96 sales and $5.3bn recorded in Q118. A resurgence in commercial sales activity helped push the volume of sales this quarter. In addition to Dexus' investment, GPT's $342m acquisition of Southbank Boulevard and Goodmans $231m acquisition of 11 Talavera Rd also stood out in what was otherwise a mix of small scale asset sales. The average sale was price this year was $38m compared to 2018 at $55m.
The weighted average cap rate for investment assets sharpened by 50bps to 5.5% which is more of a reflection of the influence of the Dexus transactions. Excluding the Dexus transactions, the weighted average cap rate would have softened 10bps to 6.1%.
Thanks to Dexus and the impact of two major transactions, the commercial sector was the strongest sector in Q1, 2019 with $3.9bn of transactions (62% of total transactions).
The weighted average cap rate sharpened by 60bps to 5.3%.
The Industrial sector recorded slightly higher volumes in the 1st quarter of 2019 than in 2018 with 21 sales worth $454m, compared to just 14 sales worth $311m in 2018.
The largest sale in Q1, 2019 was Swiss Re's acquisition of the Best & Less Distribution Centre in Eastern Creek for $99.55m, followed by Fife Capital $65.4m acquisition in Ingleburn.
There were few reported yields in the quarter which reduced the sample size, however the weighted average cap rate was 6.0%, 30Bps softer than the previous quarter.
Industrial assets are likely to continue to see strong demand throughout 2019.
The Retail sector retreated slightly in Q1, 2019 with lower sales volumes in the 1st quarter of 2019 than in 2018 with 20 sales worth $578m, compared to just 16 sales worth $610m in 2018.
The largest sale in Q1, 2019 was Stockland's disposal of the Cleveland Shopping Centre for $103m and Arcadia sale of Neeta City Shopping Centre for $85.3m.
The weighted average cap rate was 6.7%, 30Bps softer than the previous quarter.
With a significant amount of retail product on the market in 2019, cap rates are likely to rise further as buyers have plenty to choose from.
The Development sector recorded a higher number of sales (62) but with a much lower value ($1.2bn), compared to Q1, 2018 which recorded 36 sales worth $2.0bn.
The largest sale record this quarter was the purchase by Landdream of a $200m development site in Pyrmont from the Sydney of City, followed by Dahua Australia's $140m acquisition at Point Cook.