MENU

There’s life left for shopping centres

Although many have given the brick and mortar retail industry a bleak outlook, a number of analysts have recognised a series of indicators that suggest that there is still plenty of life left for the sector. In particular, Atchison Consultants’ managing director, Ken Atchison’s comment that “Shopping centres are not finished. That message is loud and clear” should give investors significant encouragement.

Whilst there was a common theme of caution and expected volatility emerging from the recent periodic reports from shopping centre operators, most of their financial results were largely in line with expectations, although “volatile retail conditions” were expected to continue whilst consumer and business confidence remained poor and the online retail sector continues its rapid rise.

However, Michael Gorman from CFS Retail Trust believes that there are “several macroeconomic indicators” that are offsetting these weaknesses, which include positive real wages growth, a slowing rate of growth in offshore travel as the Australian dollar weakens, as well as an improving housing market with interest rates remaining at an all-time low.

What may be an even more definitive sign of a recovery in the sector are the activities being undertaken by shopping centre operators themselves. For instance, operators such as CFS Retail Property Trust (ASX: CFX), Westfield Group (ASX: WDC) and its affiliate Westfield Retail Trust (ASX: WRT) are each undertaking enormous redevelopment and expansion projects on their more profitable centres.

Meanwhile, The Australian Financial Review highlighted that Shopping Centres Australasia (ASX: SCP) and Charter Hall Retail (ASX: CQR) are both looking to enhance their earnings by acquiring further stores, whilst Federation Centres (ASX: FDC) has also entered a growth phase.

The enormous amount of spending being undertaken by property groups to redevelop their shopping complexes is a clear sign of their long-term confidence for the sector.

Foolish takeaway

At the forefront of this group is Westfield which is currently trading at just $10.69 per share and offers a dividend yield of 4.8%. Having proven its dominance in the sector, now could be an excellent time to add this company to your collection.

Are you interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.