Realside’s Malaga Retail Fund is investing in the large-format retail sector through the acquisition of Malaga Home Centre in Perth for $48 million.
The transaction was signed late last year at a fully leased yield of 7.5 per cent, in the context of continued demand for large-format retail assets in established locations.
Investment performance is supported by rental upside potential and government-led infrastructure investment in the area, including a Metronet station, Perth Film Studios and upgrades to Tonkin Highway.
Realside CEO Linda Rudd said the asset offers value-add potential due to the purchase price below replacement cost and rental uplift through active management.
“The large format retail sector is primed for significant growth on account of a variety of tailwinds and nowhere is this more apparent in the current climate than in Perth,” she said.
“Malaga Home Centre’s strong location fundamentals, supported by the continued high performing WA economy, population growth, local infrastructure upgrades and strong household spending underline its current strong performance but also its considerable upside.”
Rudd said infrastructure and planning initiatives are expected to increase the catchment population, spending and visitation, supported by a renewed tenancy strategy.
Realside is targeting an average annual cash yield of 7.3 per cent and a total return above 15 per cent over five years. The fund will hold the asset as its sole investment. Capital raising is ongoing, with the fund scheduled to close on March 30 and settle in mid-April.
Malaga Home Centre is located within an established large-format retail precinct. Supply in this sector is limited, particularly in locations with suitable zoning. According to Colliers, annual supply in the 2026-2030 period may be 71 per cent below the five-year pre-pandemic average. Population and economic growth are expected to support retail performance, particularly in the large-format sector.
“We are bullish on retail generally and looking for opportunities across Australia,” Rudd said, adding that WA presents a focus due to its economic fundamentals. She said the large-format retail sector is expected to deliver returns in a market with constrained future supply.
Realside said its strategy will focus on leasing vacant space and increasing rental income, as the asset is not operating at full rental potential.
Developed in 2012 and 2015, Malaga Home Centre comprises seven buildings across three lots with a total site area of 43,279sqm, located about 15 kilometres north of Perth CBD. Tenants include Kitchen Warehouse, Beacon Lighting, Revo Fitness, Croc’s Play Centre and MCQ Supermarket. The centre also includes a PowerPlay electric go-kart facility.
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