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“This was in large part what caused Vicinity’s ratings to drop 4 percent in December 2020,” Kelley said.
Most of Australia’s shopping malls remained open during the pandemic, but lockdown laws forced shoppers to stay at home and foot traffic and revenue across the sector fell.
The outbreak hit investors hard in the country’s income-earning real estate funds. From February to March last year, the ASX 200 REIT index lost about half its value, but has since returned, hitting around 80 percent of its February high, which was weighed down by retail and office-focused trusts.
“While we remain cautious about the retail impact of potential future COVID-19 outbreaks and the challenges of the evolving retail environment, we are encouraged by a number of factors,” said Kelley.
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These include Australia’s successful efforts to contain outbreaks, the strong customer rebound during Black Friday and over Christmas, and the possible launch of a virus vaccine.
However, the group warned that their CBD centers in Brisbane, Sydney and Melbourne will continue to be affected by the current low levels of tourism and office use.
“We applaud efforts by governments and the private sector to accelerate the return of workers and visitors to CBDs in 2021,” he said.
Sydney’s office towers were only able to regain about half of their normal workers by the end of last year, while Melbourne’s long lockdown kept most of the workers out of the city center – and shopping elsewhere. Only now are many workers entering the city buildings again.
Vicinity’s neighborhood and subregional malls, geared towards non-discretionary retail, perform much better, are more resilient to valuation declines, and offer the group a higher return on income.
Outside of the CBDs, customer activity is generally returning to levels close to COVID, the landlord said. In December 2020, the average visitor share in the entire Vicinity portfolio was 88.4 percent of the previous year.
The company’s shares fell 2.5 percent to around $ 1.54 during morning trading.
Simon Johanson is a business journalist with The Age and The Sydney Morning Herald.
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