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成都夜生活

Reporting season delivering good news for investors

Office rents are tipped to rise more than 10 per cent this year. Photo: Louise KennerleyIt is the halfway mark in the reporting season and the real estate investment trust managers are upbeat about the market conditions.
成都夜生活

The best times seem to be in the office sector, where rents are rising as incentives in rental contracts are declining, while vacancy rates are also tightening.

All the office landlords that have reported, GPY Group, DEXUS Property and Mirvac, said demand is coming from a wide range of tenants, which is filling up the new developments.

This correlates with the forecasts by leasing agents that this year demand for office space will see more than 10 per cent rental growth, particularly along the eastern seaboard.

Despite some retailers finding the going tough, the landlords are seeing solid sales thanks to improved food courts and more general services, such as nail bars, that are not impacted by online shopping,.

Vicinity Centres, Mirvac and GPT Group all said their retail divisions had performed well.

Scentre Group, the manager of Westfield malls, reports on Tuesday and because of its size is seen as the market barometer.

It will unveil more details on its planned $700 million redevelopment of the David Jones store in Sydney.

DEXUS chief executive Darren Steinberg said income growth from leasing activity and development completions during FY16 helped to offset the impact of recent asset sales, driving a solid underlying result.

“We’ve progressed priority projects in our trading pipeline as well as opportunities to restock the future pipeline and we’re confident that the remaining forecast trading profits will be realised in the coming months, delivering on our full year target,” Mr Steinberg said.

Analysts also said the reporting season was positive and augured well for a steady second half.

JP Morgan analysts said they estimate 60 per cent of DEXUS’ office expiries are in Sydney/North Sydney/Parramatta and Olympic Park over 2017-19. It has repositioned 30 The Bond but has Dawn Fraser Avenue and its two Parramatta assets to go.

GPT Group’s chief executive Bob Johnston said there were positive signs across all its divisions.

“Office asset valuations were up 9 per cent for the year underpinned by the strong rental growth, particularly in Sydney as vacancy rates tighten,” Mr Johnston said.

“Melbourne has also seen strong absorption and the Brisbane market is improving,

“Our retail portfolio proved to be very resilient, delivering 3.8 per cent like for like growth for the year, as well as a slight increase in occupancy. This is a very good result in the face of the headwinds that the retail sector has had with a number of retailers placed into administration.

“Melbourne Central, Rouse Hill and Highpoint continue to outperform for the group. The strong performance of the retail assets along with a further tightening of valuations metrics saw the portfolio’s value rise by 4.8 per cent over the period.”

Mirvac’s chief executive Susan Lloyd-Hurwitz said the group has set some ambitious targets for the retail business in 2017, such as occupancy of greater than 99 per cent, total sales productivity of $10,000 per square metre and 25 per cent earnings before interest and tax growth.

“And while there has been recent pressure on certain retailers our continued focus on improved productivity and customer experience, along with a resilient tenancy mix, ensures that we are well positioned,” she said.

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