QIC has sold the Castle Mall shopping centre in Sydney’s northwest to The Hills Shire Council for $105 million, reflecting a 4.1% fully leased initial yield.
The neighbourhood shopping centre, which was anchored by IGA Express, TK Maxx and Castle Hill Medical Centre, comprised 8,916 sqm of floor space on a 7,866 sqm site.
The property was located 200 metres from a new metro station in Castle Hill – about 30 kilometres north-west of the Sydney CBD.
Michael O’Brien, Managing Director of QIC Real Estate, said the divestment of Castle Mall, located opposite Castle Towers, with both assets held jointly by the QIC Property Fund and QIC Town Centre Fund, was in line with the client endorsed strategy for the funds.
“The property was highly sought after and resulted in a very competitive bidding response from about a dozen buyers, ranging from institutions, private investors, developers and syndicators,” O’Brien said.
“QIC continues to be focused on activating its retail-anchored mixed-use town centre masterplan for Castle Towers.
“As Castle Mall does not form part of this masterplan, it was surplus to our needs.”
The transaction comes after Singapore-based investment manager Firmus Capital sold the Woolworths Schofields neighbourhood shopping centre in Sydney to a private investor for $37.5 million in January, selling for a record 3.75% yield.
Other recent Sydney retail deals includes Primewest’s purchase of the Woolworths-anchored Hurstville Retail Centre development in Hurstville for $41.5 million last December, representing a 4.77% passing yield.
Last November, Hong Kong-listed Link REIT bought 50% stakes in the Queen Victoria Building, The Strand Arcade and The Galeries properties in Sydney from GIC for $538.2 million, while CIP Asset Management sold a 50% stake in the Roselands shopping centre to JY Group for $167 million.
Across Australia, retail property investment volumes reached $2.7 billion during Q1 2022, down 13% compared to the same period last year, according to Real Capital Analytics.
That said, retail investment was up 119% to $19.6 billion during the 12 months ending in Q1 2022, RCA said.