Mainland Buyer Picks Up Melbourne Mall as Chinese Investors Return to Oz

An investor from mainland China has acquired a boutique shopping centre in Melbourne from local property fund manager MPG Funds Management, as Chinese investors are helping to drive a rebound in Australian property deals.

MPG, through its MPG Retail Brands Property Trust, sold the 3,654 square metre (39,330 square foot) Village Lakeside Shopping Centre to a mainland investor which is new to the market, JLL said in a press release, without naming the buyer or disclosing the price. An account in  the Australian Financial Review cited sources familiar with the deal as putting a A$25 million ($16.81 million) price tag on the transaction.

MingXuan Li, who heads up the Asia Desk for JLL’s capital markets team in Victoria state and helped to broker the deal, said that the purchase is part of a wave of Asian buyers coming into the Aussie market. “We are seeing a significant interest in shopping centre assets from Asian capital, particularly for metropolitan Melbourne and Sydney centres,” Li said in the statement.

Outside retail, mainland investors have also been active in the country’s office and residential property markets. Australian government statistics show that Chinese investment in the country’s housing market defied border restrictions and lockdowns in the second half of 2022 and is on track to surpass 2020 through 2021 totals.

Annual Net Income Tops A$1.35M

Located in Pakenham, a suburb southeast of Melbourne’s central business district, the asset is  the first neighbourhood mall to transact in Victoria so far this year, JLL said.

Anchored by a Coles Supermarket, the Village Lakeside Shopping Centre is fully occupied with other tenants including bakery chain Brumby’s, liquor retailer Bottle-O and Sari-Sari Asian Groceries. In a marketing document released in March, JLL said the Village Lakeside mall yields an estimated A$1.35 million in net income per year. At the stated purchase price, the buyer is paying the equivalent of A$6,842 per square metre for the property.

The 18-year-old building sits on a 11,200 square metre site with 176 parking spaces, and was renovated in 2021. With company records showing the asset carrying a book value of S$23.5 million as of June 2022, the reported purchase price represents a 6.4 percent markup for MPG which purchased the asset in 2006 for less than A$13 million.

“The sale price reflects an excellent outcome for our investors,” Brett Gorman, director of the fund manager, said in a statement. “The completion of the transaction builds upon our track record of executing on our clear investment strategies, including strategic divestments.”

Stuart Taylor, director of JLL’s retail investments team, said the marketing exercise received one of the highest volumes of enquiries his team has ever seen for a neighbourhood shopping mall, signalling strong investor appetite for defensive assets like the Village Lakeside mall.

Located at 9 Lakeside Boulevard, the property is part of Melbourne’s Princes Highway retail precinct which is anchored by retailers such as  ALDI, Dan Murphy’s and Bunnings.

JLL said the mall was the third neighbourhood shopping centre in Victoria to have been sold to Chinese private investors in the past 12 months.

Persistent Purchasers

Less than half of a year after China reopened its borders following three years of pandemic-induced isolation, mainland investors have been directing more funds into Australian property..

The latest mall sale came less than a month after another unidentified mainlander recorded Melbourne’s first major office deal this year with the purchase of the 12-storey office block at 99 Queen Street for a reported A$30 million.

In the housing market, data from Australia’s Foreign Investment Review Board (FIRB) shows that, despite ongoing lockdowns and border restrictions last year, purchases of residential real estate by mainland Chinese buyers rebounded in the second half of 2022.

Investors from mainland China spent A$1.6 billion on Aussie residential property from July through December last year, compared to just A$300 million in purchases by Hong Kong players, who ranked as the second-most prolific buyers.

The half-year total puts Chinese buyers of Australian homes on track to surpass their A$2.4 billion in spending from July 2021 through June 2022, and will also likely see them outbuy their A$2.7 billion in purchases from the preceding 12-month period.