Retail Market

Sydney Impact Report Retail Market 2014 September Quarter INSIDE THIS ISSUE: About This Report Economic Fundamentals 2 Preston Rowe Paterson prepare standard research reports covering the main markets within which we operate in each of our capital cities and major regional Retail Statistics 4 locations. Within this report we analysed the sales, leases and developments over the past six Online Retail 4 months to the reported quarter in various NSW locations of retail property categorized as; city centre, super-regional centre, major regional centre, regional centre, sub- Investment Activity 5 regional centre and neighbourhood centre. To compile the research report we have considered the most recently available Leasing Activity 6 statistics from known sources. Given the manner in which statistics are complied and published they are usually 3-6 months out of date at the time we analyse them. Development Activity 6 Where possible we consider short term movement in the statistics by looking at daily published data in the financial press. Where this shows notable fluctuation, when compared to the formal published numbers we have commented accordingly. About Preston Rowe Paterson 7 Contact Us 9 Phone: +61 2 9292 7400 1 Fax: +61 2 9292 7404 Address: Level 11, 80 Clarence Street Sydney NSW 2000 Email: [email protected] Follow us: Visit www.prpsydney.com.au to follow us © Copyright Preston Rowe Paterson Australasia Pty Limited Economic Fundamentals Unemployment (Rate and Persons) 875,000 7.00 GDP 825,000 6.50 6.00 GDP figures for the September quarter are not available until the 3rd 775,000 December 2014 however Preston Rowe Paterson Research over the 5.50 June 2014 quarter revealed that the Australian economy recorded 725,000 5.00 growth of 0.7% seasonally adjusted which reflected growth of 3.2% 675,000 seasonally adjusted over the twelve months to June 2013. 4.50 625,000 4.00 Unemployment rate (%) rate Unemployment In seasonally adjusted terms, the main industry gross value added '000 persons Unemployed 575,000 contributors to GDP were Manufacturing which increased by 2.1%, 3.50 525,000 Construction which increased by 1.4% and Accommodation and food 3.00 services up by 4.5%. 475,000 2.50 425,000 2.00 Sep-07 Sep-12 Sep-08 Sep-09 Sep-10 Sep-11 Sep-13 Sep-14 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Gross Domestic Product Mar-08 450,000.0 5.0 Unemployed Persons Unemployment Rate Source: ABS/Preston Rowe Paterson Research 400,000.0 4.0 350,000.0 Chart 2 – Unemployment – Source ABS 3.0 300,000.0 2.0 250,000.0 Interest Rates 1.0 GDP Millions 200,000.0 As at the date of publishing, the official Cash Rate over the 0.0 150,000.0 September quarter 2014 remained unchanged at 2.50%. The Reserve Bank of Australia’s Media Release for October 2014, -1.0 100,000.0 released 7th October 2014 explained that; 50,000.0 -2.0 “In Australia, most data are consistent with moderate growth in the 0.0 -3.0 economy. Resources sector investment spending is starting to decline significantly, while some other areas of private demand are Jun-08 Jun-06 Jun-07 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Sep-11 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-12 Sep-13 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-06 seeing expansion, at varying rates. Public spending is scheduled to Source: RBA /Preston Rowe Gross Domestic Product Seasonally Adjusted % Change Seasonally Adjusted Paterson Research be subdued. Overall, the Bank still expects growth to be a little below trend for the next several quarters.” Chart 1 – Gross Domestic Product (GDP) – Source ABS The media release also stated that inflation is expected to be consistent with its 2%-3% target over the next two years. Labour force Cash Rate Over the month to September 2014, the number of unemployed 8.0 people increased by 11,027 from 735,530 in August to 746,557 in September which is a 1.50% increase. In comparison to September 7.0 2013, the number of unemployed people has increased by 52,306 which reflected a percentage increase of 7.53%. The unemployment 6.0 rate is 6.1%. 5.0 The number of employment over the month to September 2014 4.0 recorded a decrease of 29,700 persons from 11,622,200 in August to 11,592,500 in September. In comparison to September 2013, 3.0 employment in Australia recorded growth of 126,130 reflecting a (%) Percentage percentage increase of 1.1%. 2.0 1.0 New South Wales experienced a large absolute decrease in seasonally adjusted employment by 4,100 persons. The 0.0 unemployment status in New South Wales over the September Jun-11 Jun-12 Jun-13 Jun-14 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Dec-10 Dec-11 Dec-12 Dec-13 Mar-12 Mar-13 Mar-14 Quarter increase by 0.1% to 5.8%. Mar-11 Source: RBA /Preston Rowe Paterson Research Cash Rate Chart 3 – Cash Rate – Source RBA Phone: +61 2 9292 7400 Fax: +61 2 9292 7404 Address: Level 11, 80 Clarence Street Sydney NSW 2000 2 Email: [email protected] Follow us: Visit www.prpsydney.com.au to follow us 2 © Copyright Preston Rowe Paterson Australasia Pty Limited Bond Market CPI According to the Australian Bureau of Statistics (September 2014), 10 Year Bond & 90 Day Bill Rate the Australia’s All Groups CPI increased by 0.5% over the September quarter from 105.9 to 106.4. The annual CPI change to In the twelve months to September 2014, the 10 Year Bond Rate September 2014 recorded a growth of 2.3%. has decreased by 45 basis points to 3.55%. Conversely, the 90 Day Bill Rate has increased by 8 basis points from 2.58% to The most significant price rises over the September quarter were for 2.66%. fruit (+14.7%), property rates and changes (6.3%). The greatest price fall over the September quarter was attributed to electricity (- Over the September 2014 quarter, 10 Year Government Bonds 5.1%) and automotive fuel (-2.5%). recorded a decline of 15 basis points from 3.70%. The 90 Day Bill Rate recorded a steady decrease over the September quarter by 4 Consumer Price Index basis points. Year on year analysis has revealed that the 90 Day Bill Rate has increased by 8 basis points since September 2013. 120.0 8 7.5 7 100.0 6.5 90 Day Bank Bill Rate, 10 year Government Bond Yield 6 and Cash Rate - Monthly 5.5 8.00 80.0 5 4.5 4 60.0 7.00 3.5 3 Aus All Groups AusAll 40.0 2.5 % Change Annual 6.00 2 1.5 20.0 1 5.00 0.5 Percentage (%) Percentage 0 0.0 -0.5 4.00 Sep-12 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-13 Sep-14 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 3.00 Source: PCA/Preston Rowe Paterson Research All Groups CPI - Australia Annual % Change Chart 6– Consumer Price Index—Source—ABS 2.00 Consumer Sentiment Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Sep-13 Sep-14 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Source: RBA /Preston Rowe Paterson Research 10 Yr Bond 90 Day Bill Cash Rate The Westpac Melbourne Institute of Consumer Sentiment Index fell Chart 4 –90 Day Bill, 10 year bond and cash rate - MONTHLY – Source RBA by 4.6% in September from 98.5 index points in August to 94 index points in September. Over the quarter the index has increased by Analysis of 10 Year Government Bonds has revealed an increase 0.8 points. Over the twelve months to September the index declined of 16 basis points over the month of September 2014 with the 10 by 16.6 index points, reflecting a decline of 15.01%. year bond rate currently at 3.48%. 90 day bill rates experienced a 9 The Index has fell below the June quarter’s recovery and is basis point growth over the month of September to 2.71%. The expected to continue to do so. Westpac’s Chief Economist, Bill changes in both 10 year bonds and the 90 day bill rate reflect a Evans stated; “This is a surprising and disappointing result...From yield spread of 56 basis points. June to August the Index had lifted by 5.9% to find it only 1.3% below the pre-Budget level. The Index is now 5.8% below the pre- 90 Day Bank Bill Rate, 10 year Government Bond Yield budget level and only 1.1% above the post-Budget print”. 5.00 and Cash Rate - Daily Consumer Sentiment Index 130 120 4.00 110 Percentage (%) Percentage 100 3.00 90 ConsumerSentiment 80 2.00 70 01-Jul-13 01-Jul-14 01-Jan-14 01-Jun-13 01-Jun-14 01-Oct-13 01-Apr-14 01-Apr-13 01-Feb-14 01-Sep-13 01-Sep-14 01-Dec-13 01-Aug-13 01-Aug-14 01-Nov-13 01-Mar-13 01-Mar-14 01-May-14 01-May-13 60 Source: RBA /Preston Rowe Paterson Research 10 Yr Bond Rate 90 Day Bill Rate Cash Rate Sep-13 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-14 Mar-08 Mar-05 Mar-06 Mar-07 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Chart 5 –90 Day Bill, 10 year bond and cash rate – DAILY – Source RBA Source: RBA /Preston Rowe Paterson Research Consumer Sentiment Index Chart 7– Consumer Sentiment Index – Source - Westpac—Melbourne Institute Survey Phone: +61 2 9292 7400 Fax: +61 2 9292 7404 Address: Level 11, 80 Clarence Street Sydney NSW 2000 3 Email: [email protected] Follow us: Visit www.prpsydney.com.au to follow us 3 © Copyright Preston Rowe Paterson Australasia Pty Limited As observed in the following graph, the NSW retail turnover is Retail Statistics heavily affected by seasonal demands.

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