Increasing vacancies in retail properties will provide new opportunities for property investors or trusts with limited gearing, according to Landmark White (LMW).
A reduction in discretionary spending would hit smaller retailers, increasing the focus on anchor tenants, LMW Invest executive director funds management Michael Este said.
"This will put more pressure on retail yield for the next six to nine months, but represents opportunities for cash-rich property investors or trusts with limited gearing," Este said.
While traditionally property offers steady yields with some level of capital growth, this was not the case in the falling 2007 markets. However, Este said this was now changing.
"What we are now seeing is an increase in yields and a focus on the fundamentals of the core assets, such as location and lease covenant, rather than investors taking any opportunity regardless of long-term prospects of the asset," he said.
Total average prime yields increased over the last six months to 7.08 percent, an increase of more than 50 basis points since December 2007.
"This increase in prime yields can be attributable to the continued impact of the availability and cost of debt, coupled with interest rate increases, which has seen discretionary spending weaken," LMW Group national research director Vanessa Rader said.
While retail within the Sydney CBD continues to record the lowest yield, nearing 6.50 percent, it is the CBD's highest yield since 2004, Rader said.
