An ASX-listed fund has acquired the newly developed Kallo Town Centre in Melbourne’s northern growth corridor for $64.5 million. This landmark deal marks Victoria’s largest neighbourhood shopping centre sale in more than four years and highlights the sector’s renewed appeal.
Stonebridge Property Group’s Justin Dowers and Kevin Tong exclusively managed the off-market sale, representing the vendor, Oreana.
The sale contributes to the $262 million worth of Victorian neighbourhood centre transactions recorded in 2024. While this marks a modest 4% increase on annual transaction volumes since COVID-19, it signals a broader resurgence in the sector, underpinned by high population growth, robust employment figures, and the increasing integration of bricks-and-mortar retail with online shopping.
Justin Dowers said, “The acquisition of Kallo Town Centre reflects the growing demand for essential retail services in Victoria. As new development opportunities become scarce, well-located neighbourhood centres are becoming increasingly valuable.
“Neighbourhood shopping centres continue to be a standout investment class, offering consistent cash flows regardless of external macroeconomic factors. The sector continues to thrive, supported by positive leasing spreads and the undersupply of retail floorspace, which is expected to drive rental growth in the short to medium term.”
According to Location IQ, Greater Melbourne faces a projected shortfall of over 188,000m2 in retail floorspace over the next five years, making neighbourhood centres critical to meeting growing demand.
Tong said, “The sale of Kallo Town Centre highlights the enduring appeal of high-quality, well-positioned retail assets. Investors are recognising the resilience and stability offered by neighbourhood centres, which are often less impacted by economic fluctuations than other property types.”
The ASX-listed fund’s acquisition comes amidst a surge in retail property transactions in Victoria, with 82% of major deals occurring in the second half of 2024. This sale marks the re-entry of REITs into the market, following a period of dormancy driven by elevated debt costs that previously limited their ability to compete for neighbourhood centres.
“With major banks forecasting interest rate cuts in 2025, market sentiment is shifting. Stabilising interest rates are fostering optimism, and we anticipate increased transaction activity in the neighbourhood shopping centre sector over the next 12 months,” said Dowers.
Add comment