Erina Fair next to go as South Korean stakeholder puts its share on the market

The shopping centre property market is showing signs of bouncing back and one of the big prizes on offer is a stake in NSW’s Erina Fair.

South Korea's National Pension Service is selling its stake in Erina Fair.

Investors are jockeying for position to buy key malls which institutions are offloading and in the crosshairs is a half stake in the massive Erina Fair shopping centre in NSW that is being sold for more than $400m.

The sale of the stake in the regional shopping centre market by South Korea’s National Pension Service is expected to set a new benchmark which will have implications across the shopping centre sector.

A deal for the stake could reset values downwards, putting pressure on the balance sheets of large listed landlord and local Westfield owner Scentre Group, and Vicinity Centres, although it would show that new buyers into the sector are keen to ride the retail cycle.

Investors are chasing malls as they have been resilient in the most recent reporting season.

Despite concerns about the slowing economy and that their values have already been written down heavily, they have become more attractive to prospective buyers than offices.

Bids on the Erina Fair asset closed earlier this month and discussions have continued with a number of parties via CBRE’s Simon Rooney, who was unavailable for comment.

The sale of the interest in the dominant regional centre on NSW’s Central Coast could spark further ructions in the property industry. It is co-owned by Lendlease’s flagship retail property fund which is still dealing with heavy redemptions.

Lendlease has separately found a new buyer for the Cairns Central complex in far north Queensland that the vehicle owns. Funds house Haben is in talks to secure the asset for close to $400m.

The results and others in the wings could mark the largest Australian shopping centre transactions for this year and while they are yet to be finalised would mark a breakthrough in the industry.

Regional malls are among the most tightly held asset classes in the country. Just 11 major regional shopping centre transactions have occurred in NSW over the past decade. A new wave of investors is keen to get exposure to the area – and vendors are meeting the market after years of holding off selling.

A former AMP Capital fund is selling a 50 per cent interest in Westfield Tea Tree Plaza in Adelaide with expectations of about $350m, while Singaporean sovereign wealth fund GIC is selling a stake in Westfield Whitford City in Perth with bids at more than $200m.

The wave of deals follows nearly $1.4bn in major retail transactions this year, in which a 50 per cent interest in the Rockingham Centre in WA was sold by ex-AMP fund to boutique manager IP Generation for $180m. The Craigieburn Central centre in Melbourne was also sold to IP Generation for $300m.

The deals mark a broad rerating of major retail property assets, ranging from large malls to subregional centres.