Ongoing volatility in the global financial markets is likely to have little impact on Sydney’s office market
AS THE Australian economy grows, average total returns in the Sydney CBD are likely to increase to 10.2 per cent in 2012 and 10 per cent in 2013 – above the long term average, according to a new report from CBRE.
CBRE senior forecasting consultant Jatin Chand said the expectation of solid GDP growth in 2012 will buoy the commercial property market.
Deloitte Access Economics currently predicts GDP growth in Australia will accelerate to over 3.5 per cent in 2012 and 2013.
“This growth is expected to support a strengthening property market and higher investment returns,” Mr Chand said.
“The Sydney office sector is also expected to benefit from the fall out in global markets, which has led to increased overseas demand for Australian investment opportunities.”
The ViewPoint forecasts are based on a study of all Sydney office sales over $5 million in value between 1991 and 2010.
The analysis shows show that 239 sales over $5 million were transacted during the period for a combined total value of $15.7 billion. The annual risk adjusted total return over this period was 9.9 per cent, compared to an average 8.9 per cent return from the Australian sharemarket.
The study also found that private investors and A-REITs have been the most frequent purchasers of Sydney office buildings.
ADELAIDE CBD SETS HIGH BAR FOR RETAIL
THE ADELAIDE CBD is the place to be for national retailers, with the city’s vacancy rate tightening faster than anticipated.
A market analysis undertaken by CBRE at the beginning of November found that there were no available tenancies on Rundle Street, while the vacancy rate on Rundle Mall was just 1.85 per cent.
CBRE global research and consulting analyst Kate Gray said demand remained strong for high profile locations such as Rundle Street and Rundle Mall.
“The rapidly tightening vacancy rate illustrates that national retailers recognise the solid fundamentals of Adelaide’s CBD retail market,” Ms Gray said.
CBRE’s analysis shows the vacancy rate on Rundle Mall declined from 3.1 per cent in June to 1.85 per cent in November, while the vacancy on Rundle Street dropped from 3.9 per cent to zero per cent during the same period.
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