Despite fears of a decline in Australia’s commercial property market towards the end of last year, the first half of 1989 has seen the country’s major cities remaining buoyant. According to Hillier Parker’s twice-yearly survey, Sydney is still the jewel in the nation’s real estate crown.
“The last two years have seen what can only be described as spectacular rental growth in established commercial office precincts,” comments the report.
During the last 12 months, office rental growth in Sydney has been some 14%, while industrials continue to benefit from a stronger leasing market, but demand from owner-occupiers has diminished. Melbourne’s rents generally recorded similar gains, but achieved lower overall growth than Sydney. “Commercial office investments are entering a period of weakening performance,” predicts the report on Melbourne. “A strong demand for new office space will remain for the next six months, but prospective tenants will experience a greater range of alternative accommodation in 1991.”
In other office markets, Perth and Adelaide achieved consistently high rental growth, but Brisbane showed a mixed performance with growth evident only during the second half. Canberra recorded a consistent trend, but overall growth was relatively unspectacular. In future, HP predict a slowdown in office rental growth in Sydney, Melbourne and Perth, with initial yields rising modestly.
