Sydney’s commercial property sector remains the ‘largest market for investors’

As Sydney’s residential real estate market continues to take a hit along with the rest of Australia, the city’s industrial sector has become an attractive alternative and remains the preferred destination for investment in Australia with a total of $12.5 billion in deals in 2018.

Melbourne came second, recording $8.5 billion worth of investment, a 12% increase that has been attributed to a 50% rise in retail property purchases. Brisbane followed with $5.4 billion of sales, while Perth showed a 6% growth in investment, the highest number of transactions in Perth since 2013 due to a 51% jump in office sales and double the amount of overseas investor activity, resulting in $2.2 billion worth of sales.

Office vacancy at lowest rate in five years

Property agency Savills reveals Sydney’s large-scale office property market has started the year with a bang, with capital values and rent rising in the last quarter. Sydney ended 2018 with a vacancy rate of 4.1 per cent, the lowest rate in five years and the least amount of empty office space since the 2000 Olympics. With record low vacancies, Sydney has a very strong take-up of vacant space, with businesses leasing close to 70,000 sqm of offices throughout 2018.

According to JLL, the Melbourne CBD was the strongest office market last year, accounting for 44.9% of the national CBD office market net absorption for the entirety of 2018; leasing 167,700 sqm of office space over the year and 9,300 sqm in just the last quarter of 2018. Melbourne’s take-up of office space has pushed vacancy rates down to 3.7%

Savills projects close to 400,000 sqm of office space coming online from 2019 to 2021, with projects by AMP Capital, Investa and Lendlease expected to be completed.

Christina Malcolm, Savills NSW director for office leasing, commented on the market:

“It is clear that prime-grade office assets with strong rental covenants and attractive locational advantages will remain in high demand for the foreseeable future.”

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