Knowledge Hub

In 2018, around 20 leases of ≥5,000 sqm were formalised. Demand came from both the public and private sectors, and was supported by lease expiries, strong business confidence and nation-leading state final demand and population growth. While many of these leases were precommitments for 2020, near-term demand for space has also been strong and is expected to stay that way in 2019, holding vacancy at 3-4%.

Landlords in Melbourne’s fringe office markets have been undertaking capital expenditure to aid in tenant attraction and retention. Upgrades have included end of trip facilities, lobbies, lifts and HVAC (Heating, Ventilation and Air-Conditioning). The upgrades have helped attract new tenants such as JB HiFi and Asahi and contributed to multiple renewals over past six months.

With Circular Quay Tower, Quay Quarter Tower, Wynyard Place, 60 Martin Place, the Light Rail and Sydney Metro among the major projects underway, Sydney CBD office workers have grown accustomed to the sights and sounds of billions of dollars worth of construction work. 151 Clarence Street (22,000 sqm) reached completion in Q4, but major new developments are still at least a year away, ensuring that Sydney’s lack of contiguous floor space continues for some time to come

Momentum in the Japanese economy slowed with a negative 2.5% growth in the third quarter of 2018. This is largely related to the drop in exports and consumer spending due to the occurrence of natural disasters. Airport closure also caused a decrease in exports and the number of inbound tourist spending, which makes up part of total exports.

The Singapore economy grew at a slower 2.2% YoY in 3Q2018. The finance & insurance sector grew at a stronger 5.6% YoY, while the information & communications sector expanded by 4.7% YoY, leading to office-using employment increasing by 7,500 workers.

After nine years of relentless expansion, Asia’s real estate markets are facing rising headwinds.

An impending trade war, rising interest rates, tighter access to credit, and buyer fatigue at sky-high prices for both commercial and residential properties are causing investors to question whether the long bull cycle may be reaching its peak: “The market’s wobbling like a jelly on a plate,” as one investor put it. “We’re at historic highs across the board.”

That said, market fundamentals in 2018 remain robust.

After nine years of relentless expansion, Asia’s real estate markets are facing rising headwinds.

An impending trade war, rising interest rates, tighter access to credit, and buyer fatigue at sky-high prices for both commercial and residential properties are causing investors to question whether the long bull cycle may be reaching its peak: “The market’s wobbling like a jelly on a plate,” as one investor put it. “We’re at historic highs across the board.”

That said, market fundamentals in 2018 remain robust. Transactions for the year are at record levels and pricing is strong, sustained by ever-growing volumes of institutional capital piling up in Asia’s biggest economies.

For now, then, the music continues, and although some investors are looking to sell down their holdings and reposition, the sheer weight of capital looking to find a home in real estate means that prices may not fall significantly even if other indicators turn south.

Investors must consider more varied strategies than in the past to get money into the market.

What’s next for Brisbane CBD?

Tenant demand remains healthy. Click on the Download button for more information on the:

• Economic indicators
• A-grade fringe net face rents market outlook
• Brisbane fringe supply pipeline
• Key leasing transactions H2 2018

Low net supply has enabled a market recovery better than we expected over recent years. We no longer find much room left for occupancy gains; in our view, the current demand to supply dynamics remain tight enough to justify modest rental growth over several more quarters.

Low net supply has enabled a market recovery better than we expected over recent years. We no longer find much room left for occupancy gains; in our view, the current demand to supply dynamics remain tight enough to justify modest rental growth over several more quarters.

Since 2013, net absorption averaging 2.0% per annum has tracked above net new supply averaging 0.8%, reducing the vacancy to cyclical lows. We highlight the current market status has some room for upward price movements as the vacancy rate hits cyclical lows. Past weak price recovery since 2012 should also help extend the ongoing slow yet stable market recovery.