Retail to improve in 2013

The retail property market is expected to strengthen throughout 2013, according to Colliers International.
The retail market had traditionally outperformed all other commercial property sectors over the past two decades, but 2012 had been a defining year, with the sector undergoing significant structural change.

We have seen weaker retail sales driven by a shift in the mix of spending, retail price deflation and pressure on retailer margins, challenges posed by the strong Australian dollar and the continued evolution of online retailing in Australia.
The retail sector in 2013 would be influenced by the impact of interest rate cuts on household disposable income, the level and intensity of price discounting by retailers and the management of operating costs by both property owners and retailers.

Retail spending remains below long-term averages in Australia, but the volatility experienced over the past six months has now moderated.

Improved sales growth has been reported and this is clearly welcome, but it is still too early to predict a turnaround in consumer confidence.

However, moving into 2013 we expect a modest improvement in retail spending with household incomes to be supported by rate cuts, cushioning the impact of slower wages growth and higher taxes.



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