Rules for retail property development eased
Thursday, April 24, 2008/
The Federal Government has moved to boost the ability of foreign grocery retailers to expand their Australian operations by easing time frames for the development of property earmarked for shopping centres.
Competition Policy and Consumer Affairs Minister Chris Bowen yesterday announced that the period foreign companies have to develop vacant land will be extended from 12 months to five years.
Foreign owned retailers such as Aldi and Franklins told a recent inquiry into grocery prices that difficulties in the property development process was preventing them establishing a greater presence in the Australian market.
Bowen says the change is aimed at improving competition in the retail grocery sector.
“The current time limit on foreign investors discourages new competitors from entering the market and prevents some existing competitors from expanding their business because they cannot secure forward purchases of land in growth areas and ‘greenfields’ sites,” Bowen says.
But the announcement has met with a lukewarm response from retail groups, with several doubting whether the changes will be effective or whether foreign retailers are in a position to inject significant new competition into the sector.
“In terms of overall competition it doesn’t resolve any of the more fundamental issues relating to market concentration,” National Association of Retail Grocers of Australia chief executive Ken Henrick says. “You just can’t resolve competition issues by getting more foreign retailers into the market, particularly given the relatively small numbers involved.”
For those that are inclined to move, however, it appears now could be a good time to snap up some retail property bargains, with reports of weak results at auctions of retail property.
According to reports, just 10 of 21 retail properties located in Victoria, NSW and Queensland put up for auction by Burgess Rawson yesterday were sold, with yields ranging from 4.6% to 8%.