Catch Up With Justin Dowers

This month we ask Justin Dowers, Partner at Stonebridge Property Group, for his take on where the majority of capital inflows into retail property is coming from and what he predicts will happen in the retail sector once the international borders open.

Justin is one of Stonebridge Victoria’s founding Partners and has over 16 years’ experience in the Australian commercial property industry. In his spare time, he races go carts with his brother and father.


Retail property is a wide field. In what sub-sectors and types of properties do you predominantly transact?

Anything retail investment related, with a core focus on neighbourhood and sub regional shopping centres, freestanding supermarkets and large format retail centres.

There has been a wave of capital searching for industrial and logistics assets in Australia. What about retail? 

Capital was directed to retail as soon as the market was aware that supermarkets were performing well in the pandemic. Initially, capital was only focussed on convenience assets given there were some head winds with the larger, sub regional centres. However progressively over the last 12 months, capital allocations to retail have been increasing, where we are now seeing assets between $100m to $500m transact with a depth of interest, which is encouraging.

Where is the majority of capital inflow into retail property coming from and what are they looking for? 

We are in a unique situation in the market where almost all buyer profiles are active.

Private investors have been particular active in the convenience retail space however they are contesting with unlisted funds and listed A-REITs

This is also the same for larger sub-regional investments. Interestingly, we are still seeing private investors compete with the funds for assets over $100m. The best example is Colin DeLutis’ acquisition of CS Square early this year for $130m, which was a highly competitive process.

Locally based Asian investors have still been active, mostly sub $50 million. However, we are becoming loathed to call them Asian investors given most of them are residents and have been active buyers and sellers in the market for 5-10 years now. They are simply investors.

A lot of the unlisted funds and the REITs are being backed by offshore capital. We’re not seeing many major groups in Asia buying directly. These major groups in Asia are mostly backing locally based companies.

The retail landscape is ever changing and Covid-19 has either disrupted or accelerated some trends. What would you say property asset purchasers are looking for today versus what they were looking for, say two years ago?

Since the pandemic hit, neighbourhood shopping centres have gone from 6.25%-5.75% to sub 5% and better (yields). And sub-regional shopping centres have gone from 7.0% and above to low 6.0%’s and in some cases, better.

Have some sub-sectors benefited at the expense of others?

It’s not black and white. The retail market is very difficult to speak about in broad statements.

Supermarket based convenience centres have performed exceptionally well.

The other winner is regionally based retail investments.

It’s only the larger multi-tenanted shopping centres that have come under a bit more threat because a number of their tenants couldn’t trade during lockdowns. There has been so much disruption but once there is more consistency with trading these centres will continue to thrive.

Strip retail, on the other hand, hasn’t been able to move with the times quick enough, because it’s owned by multiple individuals, so it is difficult for a strip like Chapel St to have an overarching strategy and take a long-term approach. A contrasting example is James St in New Farm in Brisbane. Most of the retail strip is owned by a couple of families. They have control they have been able to set a clear direction and make capital investments which have now clearly paid off, it is thriving.

Yields appear to be continually compressing. How much further can this go? Do you see this levelling out or yields even rising (prices falling) over say the next 12 months?

There’s arguments for both ways. There’s the argument that we are now working towards a higher inflation period, which may put pressure on interest rates increasing, which may then put pressure on yields.

Now that doesn’t mean that yields go backwards, but it may prevent them from sharpening if the cost of debt increases.

The other factor to consider is that in higher inflation periods, the best assets to own are retail properties, because they are the best hedge against inflation.

Do you see immigration as a factor in the pricing of retail property assets?

Immigration brings in customers, which in turn drives up the performance of these properties, which is good for retail.

You also get wealthy individuals entering into the market, particularly from China, coming here to buy real estate. So there is a big variable, and when immigration comes back, there’s no doubt in my mind that it will be good for real estate and drive buyer interest.

You won an award for the commercial agent of the year in 2018. How did that change things for you?

The award was a nice acknowledgement for the years of hard work and a good time to reflect and acknowledge those people that have really helped with my career.

Any accolades like that can assist when there is not an existing relationship with a client. However, a lot of the business I do is relationship based which I take very seriously.

That old saying – ‘you’re only as good as your last deal’ is very true in this industry.

Outside of business where do you find the most enjoyment?

I have recently become a family man which I value a lot.

Outside of that I like most things car related. I raced go karts with my Dad and brother since I was 12 and stopped when I was 20. We have recently taken it back up which is a lot of fun. Its harder on the body than I remember it though.


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