Increasing Retail Costs Explained

by Admin on September 16, 2014

By Helen Douglas from CorporateRealEstate.com

Pentagon Row Retail courtyard with Housing aboveIt is safe to presume that shopping is an activity most people have to factor into their weekly budget. From a spontaneous bout of retail therapy to the weekly grocery shop, unless you are a stringent budget shopper, these tasks are often a pricey exercise- gradually becoming more expensive as time rolls on. Ever since the GFC, people have not been able to devote as much money, or time, to retail purchases as they once could.

Have you ever wondered why this is the case? Do you find yourself agonizing over how much your next grocery shop will cost? You’re not alone…

It’s not only your wallets that are feeling the brunt of it, but the shopping centres are feeling the effects of the economic climate too. In fact, in the last few years shopping centre net incomes have faced severe challenges. And so the slippery slope begun.

According to BIS Shrapnel’s latest Retail Property Market 2014 to 2024 report, this trend is likely to continue for the next 5 years.

The report explains that there are 5 crucial factors at work and each are likely to inhibit income growth. These factors comprise:

  • Modest GDP growth
  • Slowing population growth
  • Household disposable income averaging 2.6% compared with a 25 year average of 3.3%
  • Retail turnover growth averaging 2.9% per annum

The concoction of the above factors make it very difficult for the shopping centres’ income to rise, thus forcing them to increase rent, putting strain on tenants- thus turning shopping into a pricey exercise.

You may be thinking, ‘I still shop and all my friends do too, regardless of how expensive it is. Why would there be a problem?’  The problem lies in the fact that the market is steady but modest, when it should be, in an ideal world, thriving.

The report’s author, Senior Project Manager Maria Lee elaborates “Add the five factors together, and we predict that shopping centre incomes will average around 2.6% annual growth over the next five years, failing to keep pace with inflation.”

Inflation aside, online shopping plays a big role in the decline of the shopping centre income. BIS Shrapnel estimates that the growth of online shopping will knock about 0.5 percentage points per annum from the turnover growth flowing to shopping centres. Lee continues: “In addition, there are factors that affect the distribution of aggregate expenditure both between physical shops and online, and between one shopping centre and another.”

So when you’re next at the shops, take a moment to think about the state of the market and how it affecting more than one party. As long as the markets stays the same, the prices of your essential goods may stay that little bit “overpriced”. Be mindful of the effects of online shopping too, and as the consumer, be mindful that this a cyclical process and will take time to improve. As BIS Shrapnel has said, the market is steady but modest. At least it’s not unsteady because then we could be in real trouble.

photo by:

One trend in the real estate investment world is to turn old properties into fully-furnished, renovated and gorgeous properties. Buyers appreciate paying extra for properties that already look great and do not require many renovations or repairs. An investor can significantly increase the value of a property by taking some time to do extra work on the home. Choosing the right contractor for a job can be difficult. To ensure that one chooses a reliable and hard-working contractor, here are some tips to remember.

Construction Workers Looking at Roof

1. Don’t fall into the trap of hiring the contractor who offers services for the lowest fees.

Remember the motto that “you get what you pay for.” When you are hiring a contractor, this motto especially rings true. A truly great contractor will not sell his or her services below fair market value. A contractor may be charging very low prices due to the fact that he or she is inexperienced or has no clients.

2. Pay attention to small details that can significantly increase the value of a home.

You should hire a contractor who has a knack for finding small and cost-effective ways to improve the value of the home. A contractor may recommend installing iPod docks throughout the home, which is one very affordable way to modernize and increase the profitability of a home.

3. Find referrals from other real estate investors.

Real estate investors frequently socialize in the same circles. If you are not part of a social circle that features real estate investors, then make an effort to seek out investors in your area. Don’t be shy to ask them for references in regards to contractors. One investor may know of an excellent contractor that offers fair prices and has a reputation for delivering high-quality work. Real estate investors are more than happy to help one another in this regard, and you should not feel afraid or intimidated to ask others for references. You may even be able to gain a few US probate leads by opening the doors to communication with other investors.

4. Stay updated on the progress of a renovation throughout the job.

Make an effort to understand the progress of the project. Take the time to do your own assessments so that you can be aware if a project is running off course.

5. Be clear in your specifications and the price set for the job.

The clearer you are in setting a price and specifying what you want on paper, the more likely a contractor is to actually fulfill your wishes.

By following these tips, you will succeed in finding a contractor who is cut out for your real estate investment project. Securing references is the best way to proceed with this process.

Author Bio

Karleia is a freelance blogger. Away from the office she enjoys spending time with her daughters and husband.

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