Westfield

The prospect of more lockdowns across Australia to control the coronavirus pandemic has prompted a warning from credit agency Moody’s Investors Service that virus flare-ups and weak consumer sentiment are delaying retail sector recovery.

The battle between shopping centre landlords and retailers is entering a new and potentially more dangerous phase as the country’s largest listed retail property company signals it will take a tough line on larger chains refusing to pay rent.

The normally subterranean battle between shopping centre owners and hard-pressed tenants burst into ugly view this week, with much more at stake than the usual tough talk between business rivals.

The powerful property industry has warned that an extension of the Morrison government’s leasing code for small tenants until March next year could see the overall cost of the scheme blow out to about $15bn.

International shopping centre giant Unibail-Rodamco-Westfield has pushed back billions worth of development projects and will look to sell more malls as it deals with the coronavirus crisis.

The coronavirus has slugged major regional malls while listed property groups with an exposure to Victoria have also been hit in recent days as lockdowns return.

Shoppers appear to be flocking back to stores, with the owner of Westfield malls in Australia saying customer visits are getting close to the levels of a year ago, but Melbourne’s coronavirus outbreak will force some retailers to wind back their operations.

Shoppers are heading back into malls, but not at the same rate as before the coronavirus struck and smaller convenience-style shops are beating out larger regional centres that were traditionally at the top of the property tree.

Shopping centre landlords face a steep fall in rents of about 20% when the Morrison government’s stimulus package ends later this year, according to Morgan Stanley analysts.