Mugunthan Siva – Managing Director – India Avenue Investment Management

Westfield is a name all Australians know well. The company originated in 1959 and was floated in 1960 and now has operations in the US, UK and New Zealand as well as small operations in Europe and Latin America. In 2014 the Group split into two independent companies called Scentre Group operating the Australia and New Zealand Westfield Shopping Centre portfolio; and Westfield Corporation, which operates the US and UK portfolios.

The prime focus for the company was development, design, construction, property management, leasing and marketing activities. The company benefitted from Australia’s retail industry growing to A$330bn at a pace of 3.1% (over the last 5 years). Additionally, Australia is predominantly urbanised, largely “organised” in retailing  and we have a high GDP per capita (above US$55,000) – all of which are highly conducive to mall style retailing.

However, looking forward, Australia’s retail sales growth has been slowing given higher levels of household debt, lack of wage growth, therefore lower growth in GDP per capita and alternative modes of retailing emerging, which is leading to disruption, competition and a more challenging environment. An investment in Scentre Group has led to approximately a 0% return, when accounting for share price growth and dividends, since 2016.

More >