Australia’s commercial property professionals have maintained a bullish outlook on capital values for the coming 12 months. However, the value of retail assets is likely to decline further, according to new research from the Royal Institution of Chartered Surveyors (RICS).
The RICS Q4 2019 Australia Commercial Property Monitor – which surveys experts working in the property industry, including valuers, to gain insights into market confidence – delivered the strongest outlook for overall commercial capital values since the first quarter of 2018.
Most of those surveyed cited the investor market as the principal source of confidence, noting that the majority of demand was coming from domestic investors rather than offshore.
Investor sentiment edged higher to sit at +8, while owner-occupier sentiment remained flat, near zero.
Access to finance was one of the critical drivers of investor activity, with 40 per cent of respondents citing easier access to credit as a source of confidence.
Combined capital-city values and rents are expected to increase by between 1 per cent to 1.5 per cent over the next 12 months.
But respondents noted a significant divergence in values depending on asset class and city.
Office and industrial properties are expected to substantially outperform retail, while Sydney and Melbourne are expected to see more substantial overall increases than Brisbane or Perth.
Prime industrial values across the country are predicted to rise by 4 per cent over the coming 12 months while prime office values are expected to jump by 3.5 per cent.
RICS Australasia managing director Chris Nicholl said the expected rental upturn across several asset classes was driving investor confidence.
“Confidence in the market is largely driven by the expected rental returns for prime office space, with Sydney, Melbourne, Perth and Brisbane all reporting expectations of a healthy increase over the first quarter of 2020,” Mr Nicholl said.
“A forecast interest rate cut and the recent diminished tension in the United States-China’ trade war’ have also been attributed to lifting sentiment.”
Prime retail values will remain relatively flat, with a 1 per cent increase predicted. But secondary retail values are likely to dip by 2.1 per cent, with Sydney and Melbourne recording the biggest dip of all the capitals at 2.2 per cent each.
In terms of rents, prime office rents are expected to jump by 3.2 per cent in the next 12 months while prime industrial rents will increase by 2.6 per cent.
Meanwhile, prime retail rents will grow by just 0.1 per cent, and secondary retail rents will dip by 2.2 per cent. Melbourne will be the worst hit in that category, with respondents predicting a dip of 3.7 per cent.
“While Brisbane and Melbourne are expected to see a slight increase in prime retail rents, the forecast remains bleak for Sydney and Perth,” Mr Nicholl said.
He added that there was little on the horizon to indicate a short-term turnaround for the retail sector.
“Retail continues to underperform other asset classes, and signs of recovery are looking increasingly unlikely, with the recent emergence of unforeseen problems such as the outbreak of coronavirus.”
This article is republished from www.commercialrealestate.com.au under a Creative Commons license. Read the original article.
Brisbane Poised To Attract More Buyers
Brisbane’s housing market is poised to attract many potential homebuyers this year, supported by its infrastructure pipeline and the increasing interstate migration, according to a forecast by the Finance Brokers Association of Australia (FBAA).
The affordability gap between Brisbane and the two biggest capital city markets, Sydney and Melbourne, has influenced the influx of people to Queensland, boosting the housing demand in Brisbane.
FBAA said Sydney’s property cycles, in particular, have been the driving force of interstate migration to Brisbane.
“The real effect of this migration increase has come into question and rightly so, how influential can an additional 30,000 people be to an entire capital city market. The driving force is the affordability gap between Sydney and Melbourne,” FBAA said.
Recent figures from the Australian Bureau of Statistics show that Sydney is currently 64% more expensive than Brisbane.
“Each time we’ve seen the price gap rise, we’ve seen an exodus of people out of New South Wales to Queensland resulting in Brisbane price increases,” FBAA said.
Furthermore, the pipeline of infrastructure developments in Brisbane might boost its appeal to potential buyers.
Some of the anticipated developments include the Brisbane Airport expansion, Brisbane Metro, Northshore Hamilton Precinct, Cross River Rail, Brisbane Live, and Queens Wharf redevelopment.
“The evolution of Brisbane combined with the proven market drivers will be critical to the direction in which Brisbane’s property cycle moves. In terms of price rises, we’ll require the imbalance of supply and demand to favour the demand,” FBAA said.
According to a separate forecast by Domain, Brisbane is slated to record the second-highest price growth this year next to Sydney.
“We forecast the median house price to rise by 8% in 2020 and in 2021. This follows a period of soft price growth when Brisbane’s house prices rose only 5% in the previous three years,” said Trent Shire, an economist at Domain.
With this price-growth projection, Brisbane could witness its median house price go over the $600,000 mark for the first time.
This article is republished from www.yourinvestmentpropertymag.com.au under a Creative Commons license. Read the original article.
Commercial Market Update – Brisbane Cityscope February 2020
The latest research from Brisbane Cityscope shows property sale numbers have increased in the past three months but sales figures have dropped. The last three months to the beginning of February 2020 recorded 36 sales for a total of just over $806 million, with $761.9 million for commercial, $32.8 million for commercial strata, $7.8 million for retail strata and $3.4 million for other.
In comparison, the last three months to the beginning of November 2019 recorded 16 sales for a total of just over $1.411 billion, with $1.29 billion for commercial, $6 million for commercial strata, $106.6 million for retail, $600,000 for retail strata and $2.2 million for other.
The 12 months leading up to the beginning of February 2020 recorded 78 sales for a total of over $2.93 billion, more than $745.2 million higher than the recorded figure for the same time period the year before.
The table below shows sales recorded for the past eight updates of Brisbane Cityscope:
The most significant sales recorded this quarter were:
Two commercial towers at 141 Queen Street and 140 Elizabeth Street have been sold together for over $393.8 million to Shayher Properties Pty Ltd. 140 Elizabeth comprises an 11-storey commercial building with over 10,000 sqm of office space and 950 sqm of retail space fronting Queen and Albert Streets. 141 Queen Street comprises a 25-storey, 19,478 sqm office building with a retail arcade at street level. Jacob Swan and Seb Turnbull of JLL Brisbane negotiated the sale with Lachlan MacGillivray, Jason Lynch and Don Mackenzie of Colliers International Brisbane. The sale represented an initial yield of 6.05% on a passing income of $23,827,007 (net).
A 20-storey office building at 313 Adelaide Street has sold for just over $137.5 million to PS Financing SPV Pty Ltd. The building comprises one level of basement car parking, ground floor retail space, three levels of car parking above ground floor and 16 levels of offices; it has a gross floor area of 15,940 sqm above podium level. Bruce Baker, Tom Phipps and Flint Davidson of CBRE Brisbane negotiated the sale which represented a capitalisation rate of 5.75% on a passing income of around $7,910,612 (net). The property last traded in 2015 for $114 million.
Centuria Property Group has purchased 348 Edward Street on behalf of their Centuria 348 Edward Street Fund. The 16-storey, 11,211 sqm office building was bought for $89 million, which represented initial yield of 5.39% on a passing income of $4,797,627 (net). Flint Davidson, Adelaide O’Brien, Tom Phipps and Marc Giuffrida of CBRE Brisbane negotiated the sale with Seb Turnbull and Stuart McCann of JLL Brisbane. The property last traded in 2016 for $49 million.
Properties currently listed for sale include:
- Level 1, 371 Queen Street – a 243 sqm unit comprising the whole first floor, split into two tenancies. For sale by expressions of interest, closing February 27, 2020; agent, Colliers International Brisbane (Tony Huan Wang and Nick Wedge).
- 331 George Street – a 900 sqm, three-storey plus basement building, formerly known as the Ryan and Bosscher House and built in 1916. For sale by offers to purchase; agent, Colliers International Brisbane (Hunter Higgins). The property was advertised with a current net income of $471,342 per annum.
- Collin House, 463-469 Adelaide Street – a five-level office building with frontages to both Queen Street and Adelaide Street. For sale by offers to purchase; agent, JPM Commercial (Justin Mollard).
Properties currently under contract (conditional or unconditional) include:
- 410 Queen Street – a 15-storey, 5,704 sqm office building with ground floor retail space and car parking for 42 vehicles. Under contract unconditionally; agents, CBRE Brisbane (Peter Chapple, Jack Morrison and Tom Phipps) and Cushman & Wakefield Brisbane (Peter Court and Mike Walsh).
This article is republished from www.corelogic.com.au under a Creative Commons license. Read the original article.
Commercial Market Update – Brisbane Fringe Cityscope February 2020
The latest research from Brisbane Fringe Cityscope shows property sale numbers have remained steady but sales figures have increased in the past three months. The last three months to the beginning of February 2020 recorded 15 sales for a total of $216.5 million, with $194.7 million for commercial, $3.8 million for commercial strata, $6.5 million for retail, $100,000 for retail strata and $10.5 million for other.
In comparison, the last three months to the beginning of November 2019 recorded 17 sales for a total of $55.5 million, with $4.3 million for commercial, $3.7 million for commercial strata, $5 million for retail, $200,000 for retail strata and $42.4 million for other.
The 12 months leading up to early February 2020 recorded 70 sales for a total of $536.1 million, more than $693.2 million less than the same time last year.
The table below shows sales recorded for the past eight updates of Brisbane Fringe Cityscope:
Significant sales recorded this quarter total over $189 million, these sales include:
An 11-storey office building at 757 Ann Street, Fortitude Valley has been sold for around $94 million on an initial yield of 6.6%; settlement is expected in April 2020. The 9,422 sqm building includes ground floor retail space, nine levels of office space, a rooftop bar and car parking for 48 vehicles. The sale was negotiated by Mike Walsh and Peter Court of Cushman & Wakefield Brisbane. It last traded for $65.5 million in 2014.
19 Lang Parade, Milton, comprising two office buildings, has been sold off-market for $85.2 million to Nikos Property Group Pty Ltd. The site includes a two-storey building, known as Terrace Suites, which was was built prior to 1990 and sits behind a seven-storey commercial building which was built in 2009 and extended by one floor in 2011. Together the buildings have a gross floor area of 31,567 sqm. Mike Walsh and Peter Court of Cushman & Wakefield Brisbane negotiated the sale which represented an initial yield of 8.35% on a passing income of $7,114,200 (net).
Three warehouse/workshop buildings with frontages to Crombie Street, Cribb Street and McDougall Street were sold together for $10.5 million to Clare Cribb Pty Ltd. The three buildings are comprised of a two-level, 2,514 sqm building, a 565 sqm workshop/warehouse building to Crombie Street and a 723 sqm workshop/warehouse building to the corner of Cribb and Crombie Streets. Andrew Gard and Michael Nick Spiro of Cushman & Wakefield Brisbane negotiated the sale. The property last traded for just over $13.7 million in 2015.
Properties for sale include:
- Vaya Place, 451 St Pauls Terrace, Fortitude Valley – a six-storey, 1,553 sqm office building with a ground floor cafe. For sale by offers to purchase; agent, Cushman & Wakefield Brisbane (Michael Gard and Andrew Gard).
- 107 Warry Street, Fortitude Valley – a two-storey, 279 sqm building used commercially. For sale by expressions of interest; agent, Cushman & Wakefield Brisbane (Sam Callanan and Michael Gard).
- 16 Julia Street, Fortitude Valley – a two-storey, 424 sqm office building with basement car parking for eight vehicles. For sale by expressions of interest; agent, Elders Commercial Brisbane (Clinton Mallan and Jordan George).
- The Dorchester Inn, 484 Upper Edward Street, Spring Hill – a two-storey building with 12 self-contained units, laundry facilities and car parking for 10 vehicles. For sale by offers to purchase; agents, Ray White Commercial Brisbane (John Dwyer and Jason Hines) and HTL Property (Glenn Price).
Properties under contract (conditional or unconditional) include:
- Humanity Place, 49 Park Road, Milton – a three-storey, 2,638 sqm office building with car parking for 57 vehicles. Under contract unconditionally with settlement expected May 2020; agents, Colliers International (Hunter Higgins, Nick Wedge and Guy Wells) and Knight Frank Brisbane (Blake Goddard and Christian Sandstrom).
- Industry House, 375 Wickham Terrace and an adjoining car park at 21 Lilley Street, Spring Hill – a two-storey, 1,840 sqm office building and an adjoining paved car park. Under conditional contract; agent, JILL Brisbane (Sam Bryne, Tim Jones and Seb Turnbull).
This article is republished from www.corelogic.com.au under a Creative Commons license. Read the original article.
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