Sales volume in the Sydney retail strata market increased by 34% in the first half of 2010, when compared to figures from the same period in 2009 according to the latest MarketView report from CB Richard Ellis.

CBRE Director, City Sales, Gavin Lloyd said this equated to over $32.2 million in strata retail sales since the beginning of the year.

"The increase in sales transactions indicates investor confidence is returning to CBD retail strata market," Mr Lloyd said.

"Low vacancy rates in the CBD have resulted in retailers looking for space in the Prime and Secondary retail precincts. This has in turn boosted demand for strata retail properties in the first half of the year."

"In particular the Southern sub-sector commanded 40% of all transactions indicating the strength of retailer demand for tenancies in this emerging precinct."

The stand-out retail sale of the year thus far was lower ground floor of Sydney's Regent Place Shopping Centre for $10 million. The 2,067 square metre strata space is located at 501-509 George Street was sold to a private investor on behalf of Receivers and Managers Deloitte.

In regard to capital values, the report shows that Sydney retail strata recorded an overall increase in the first half of 2010, with the CBD core achieving the highest price, averaging $17,621 a square metre.

CBRE's City Sales Manager, Rohan Ramsay said the recent sale of the iconic Belgium Beer Cafe building for $4.2 million demonstrated investor demand for prime located assets with quality tenants.

The heritage building located at 129-135 Harrington Street is fully leased to the Belgium Beer Cafe on a seven year lease that commenced in February 2010 with a seven year option.

The property underwent a multimillion dollar fit-out and is located in Sydney's financial core precinct in close proximity to Circular Quay, The Rocks and some of Sydney's most prestigious buildings including Grosvenor Place, ASX and Goldfields House.

Mr Ramsay added that retail capital values in the CBD were more unpredictable when compared with other markets as they are heavily influenced by the quality of the premises and year by year sales turnover.

"While overall retail capital values recorded positive results for the first half of the year, there was a large range between the top and bottom of the market," Mr Ramsay said.

"The Core sub-sector was the leading performer averaged capital values of $17,621 a square metre while the Western corridor sub-sector recorded the lowest capital values with an average of $5,154 a square metre."

The MarketView report projects moderate retail over the next five year period with average gains of 1.9% expected," Mr Ramsay said.

Turning to the strata office market office strata sales volume for the CBD totalled over $47.4 million for the first half of the year representing a 24% decrease from the same period in 2009.

Mr Lloyd said the traditionally project-based Sydney strata market had experienced a lack of investment stock despite increased purchaser demand.

"The highest performing of all CBD sub-sectors was Waterfront which takes into account King Street Wharf and Shelley Street, strata properties recorded an increase in sales of 32% from 2009 figures. "

CBRE's City Sales Manager, Rohan Ramsay said that office Waterfront strata properties also commanded the highest capital values per square metre in the first half of 2010.

"Waterfront strata offices continued to achieve the highest capital values, averaging $8,716 a square metre in the first half of 2010, followed by an average of $6,170 a square metre for the Core sub-sector," Mr Ramsay said.

"Overall capital values for strata office premise in the CBD averaged $5,240 a square metre as at June 2010 a decrease of 3.3% from the same period in 2009."

"Our latest sale of a 74 square metre suite at 23 Hunter Street for $515,000 demonstrated owner occupier demand was not just limited to the larger end of the market," Mr Ramsay said.

Mr Lloyd added that Sydney's CBD strata office market would continue to be viewed as an affordable means of direct property ownership.

"Moving forward, forecasts indicate that a lack of supply is expected to drive up rents in the CBD over the next three years," Mr Lloyd said.

"Demand for both strata office and retail strata is expected to be positive as a result, as potential owner occupiers look to cut costs and investors in the sub $5 million range look to take advantage of the CBD's rental growth potential."

"However, rising interest rates could prove hindrances to any capital value growth as potential purchasers are forced to consider increased holding costs over the short to medium term."

About CB Richard Ellis CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world's largest commercial real estate services firm (in terms of 2009 revenue). The Company has approximately 29,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com.au

Contact: Kathryn House kathryn.house@cbre.com.au +61 2 9333 3585