Australian Shopping Centres: Establishing a Conceptual Business Model

Australian shopping centres have evolved into complex operating businesses rather than just investments in dynamic and valuable physical assets. Investors need to understand this, and establish an operational structure/framework to invest in a substantial and generally illiquid asset class offering historically high returns. Australian shopping centres represent an A$127 billion asset class that provides over 50% of institutionally owned property and is generally five to 10% of an Australian mixed asset investment portfolio. The sector has historically delivered strong income streams and total returns with significant diversification benefits. Australian shopping centre income streams and values are heavily dependant on its retailers' performance for the success of the centre and its value.Based on a review of literature and associated Property Council of Australia data analysis, this paper proposes that an Australian shopping centre should be treated by investors as a business rather than just an investment and suggests a conceptual model for Australian Shopping Centres. The suggested framework is developed to adequately identify the issues that need to be managed, the mechanisms to manage them and therefore establish the structure required for investment in the Australian retail property asset class so as to optimise long term returns. The key attributes of the model's framework comprise clarifying the ownership from management issues which incorporate the critical property management, leasing and development management functions between the shopping centre ownership, its retailer customers and their customers, the shoppers.