Research by Knight Frank shows the total value of retail sales greater than $5 million in metropolitan Melbourne so far this year is just $125.8 million, a fraction of the total $1.99 billion in retail sales last year.
Knight Frank blames the sharp drop in retail property investment on tightening credit markets and a lack of investor and consumer confidence arising from uncertain economic conditions. Among the biggest retail transactions this year were the $87 million sale of The Foundry in Bourke Street, and the $17.65 million sale of Summerhill Village Shopping Centre in Reservoir, the agency says.
Despite the slowdown in sales activity, 2009 is expected to be a record year for retail construction in Melbourne, led by the bulky goods sector.
"Some 400,000 square metres of new retail space has been approved for completion in 2009," Knight Frank state director of retail Sandra Wilson said.
"This is almost 10% more than the total of what will be built over 2008, which had been the highest amount in more than five years and equates to roughly 8.5% of the current total metropolitan market of 4.6 million sq m."
Ms Wilson says a large portion of new retail construction next year will be at Chadstone Shopping Centre, where construction of a $100 million, 40,500sqm extension has begun.
Westfield is also adding 58,000 sq m of retail space to its Doncaster shopping centre, while Lend Lease is adding 24,500sqm to the Greensborough Plaza, in Melbourne’s north-east, the agency says.
A further 50,000 sq m of retail space is under construction at Austexx’s South Wharf project in Docklands, and the second stage of MAB’s University Hill in Bundoora. Knight Frank expects retail construction to die down by 2010.