Infrastructure drives buoyant commercial property market

Media release - Sydney, NSW (19 April 2017) 

Infrastructure drives buoyant commercial property market

Raine & Horne’s latest Commercial Insights report confirms commercial property markets are a key beneficiary of new infrastructure projects.

  • The wealth of new prime office space in Sydney’s Barangaroo precinct has created a shortage of B-grade office space in the Sydney CBD.
  • In Sydney’s Olympic Park district Raine & Horne sold a 22,000-metre industrial site for $65 million, smashing a decades-long price record.
  • The Gold Coast commercial market is highly buoyant backed by preparations for the 2018 Commonwealth Games and the construction of Stage 2 of the Light Rail system.
  • In Hobart, the construction of several new high-rise hotels has sparked international interest in the city by local and offshore developers and investors.

Independent analysis by leading national property group - Raine & Horne Commercial, confirms Australia’s commercial property market is experiencing boom conditions.

“High sales volumes are being driven by low interest rates coupled with intensifying demand from self-managed super funds, overseas investors and business owners looking to purchase their premises,” said Angus Raine, Executive Chairman, Raine & Horne.

Market conditions are most buoyant in those areas where major infrastructure projects are either underway or completed.

“The wealth of infrastructure developments across many parts of the country is having a major impact on commercial property values, yields and vacancy rates. In conjunction with historically low lending rates and incoming changes to superannuation, interest in commercial properties is coming from a range of investors – both local and offshore, as well as small to medium businesses seizing opportunities to own their premise,” said Mr Raine.

“The detailed analysis of Raine & Horne’s commercial property experts across Australia makes our Commercial Insights Report a rich source of information on the state of metropolitan and regional commercial markets nationally. It is a valuable resource for self-managed super funds, business owners and investors seeking healthy yields in a low return environment.”

Key highlights from Commercial Insights

Sydney – The development of Barangaroo has altered the office space market in the CBD leaving a shortage of B-grade space. Coupled with the conversion of former commercial space in Liverpool, Bathurst and Elizabeth Streets to residential apartments, CBD prices have risen 10% in the last 12 months.

In the Inner West and South Sydney, freestanding properties are commanding $7,000 per square metre. Asset values are expected to increase by 5.0-10.0% over the next 12 months.

Western Sydney is characterised by record prices and vacancy rates in some cases below 2%. In February 2017 Raine & Horne Commercial Olympic Park sold a 22,000-square metre prime industrial site in Auburn for $65 million on behalf of Dexus Property Group (DEXUS), representing one of the biggest sales transacted in the area in the last decade.

Brisbane –The North Brisbane region is benefiting from several infrastructure improvements including the $1.2 billion Redcliffe Peninsula Rail Line. Key infrastructure projects on Brisbane’s southside include Waratah Industry Park at Acacia Ridge – a 20-lot industrial land subdivision with a $35 million end realisation value.

Gold Coast – Supported by preparations for the 2018 Commonwealth Games, the Gold Coast market is especially robust with yields ranging from 6.0-7.0% for residential property through to 8.0-9.0% on industrial property and 9.0% on office property.

Melbourne – Melbourne’s eastern suburbs from Box Hill to Bayswater are especially strong with yields in the order of 5.0-6.0% depending on location and asset quality.  The western suburbs are also performing well backed by the completion of new unit complexes in Yarraville and Keilor East.

Hobart – Hobart's commercial market is extremely confident at present, supported by a significant investment in the city by the Singapore-based Fragrance Group. This has underpinned interest from other developers and investors, both domestic and international. In the tightly held Greater Hobart market, there is a shortage of listed stock and yields are falling, currently sitting at 5.0-6.5% for retail assets and 7.0-8.0% for office space.  Industrial properties in the Moonah-Glenorchy precinct are achieving yields of 7.5-8.5%.

For more information on Australian commercial property markets, download a copy of Raine & Horne Commercial Insights.

About Raine & Horne Commercial

For more than 130 years, Raine & Horne has been assisting Australians achieve their property objectives. Since its launch in 1984, Raine & Horne Commercial has been an active market participant and is now the largest commercial property group in Australia, with over 35 offices servicing every state capital and key regional growth centres.

It is a full-service commercial real estate network with a broad suite of commercial, industrial and retail property services including sales, leasing, consulting, business broking, business recovery & insolvency, facilities and asset management services.

For further media information contact:

Annette Weir, Marketing Manager Raine & Horne Pty Ltd on 02 9258 5400