Attractive yields and a recovering leasing market are drawing heightened interest in the Perth office market, new CBRE research has shown.
CBRE’s Q2 Office MarketView highlights that a total of $8.5 billion in office property valued at over $5 million changed hands nationally during the six-month period – up 21% on the previous corresponding period.
While Sydney and Melbourne were the two most active markets in the country, Perth is rising on investor radars given the record high yield spread between the WA capital and eastern seaboard markets.
CBRE’s WA Head of Capital Markets Aaron Desange noted that activity in the first half had been relatively slow due to stock availability, with just under $300 million in Perth assets changing hands across a handful of deals.
“There is pent up demand from both domestic and offshore capital for Perth office investments - which offer one of the highest effective rental growth forecasts, overlaid with one of the most attractive yield spreads in the Asia Pacific region,” Mr Desange said.
“We expect there will be a significant volume of transactions in the second half of the year, which are anticipated to exceed $1 billion in total for 2019 - including Chevron’s new headquarters and 28 The Esplanade along with a number of CBD assets which are set to come to market in Q3.”
Mr Desange added; “Primewest’s $86 million purchase of ENI House from 151 Property has been one of the largest deals of the year so far, which attracted a significant level of both onshore and offshore bids due to the attractive rental and capital growth prospects.”
A recovery in the Perth leasing market will be another driver, with CBRE’s Q2 MarketView highlighting that the second quarter of 2019 marked a turning point for the Perth office market as prime face rents increased for the first time since 2013.
CBRE’s head of Capital Markets research, Ben Martin-Henry, said further increases were expected in the medium term in line with rising tenant demand and tightening vacancy as the Perth office market continues its recovery.
At a national level, CBRE’s MarketView report shows that sales volumes were better than expected, registering the strongest start to a year on record.
“This has resulted in further yield compression across all major markets to a national average of 5.2% for prime stock,’ Mr Martin-Henry said.
He noted that the RBA’s announcement of two, 25bps rate cuts since the Federal election meant that investors were now capitalising on rates of sub 3%, which was expected to drive further compression in property yields.
CBRE’s Q2 Office MarketView highlights that a total of $8.5 billion in office property valued at over $5 million changed hands nationally during the six-month period – up 21% on the previous corresponding period.
While Sydney and Melbourne were the two most active markets in the country, Perth is rising on investor radars given the record high yield spread between the WA capital and eastern seaboard markets.
CBRE’s WA Head of Capital Markets Aaron Desange noted that activity in the first half had been relatively slow due to stock availability, with just under $300 million in Perth assets changing hands across a handful of deals.
“There is pent up demand from both domestic and offshore capital for Perth office investments - which offer one of the highest effective rental growth forecasts, overlaid with one of the most attractive yield spreads in the Asia Pacific region,” Mr Desange said.
“We expect there will be a significant volume of transactions in the second half of the year, which are anticipated to exceed $1 billion in total for 2019 - including Chevron’s new headquarters and 28 The Esplanade along with a number of CBD assets which are set to come to market in Q3.”
Mr Desange added; “Primewest’s $86 million purchase of ENI House from 151 Property has been one of the largest deals of the year so far, which attracted a significant level of both onshore and offshore bids due to the attractive rental and capital growth prospects.”
A recovery in the Perth leasing market will be another driver, with CBRE’s Q2 MarketView highlighting that the second quarter of 2019 marked a turning point for the Perth office market as prime face rents increased for the first time since 2013.
CBRE’s head of Capital Markets research, Ben Martin-Henry, said further increases were expected in the medium term in line with rising tenant demand and tightening vacancy as the Perth office market continues its recovery.
At a national level, CBRE’s MarketView report shows that sales volumes were better than expected, registering the strongest start to a year on record.
“This has resulted in further yield compression across all major markets to a national average of 5.2% for prime stock,’ Mr Martin-Henry said.
He noted that the RBA’s announcement of two, 25bps rate cuts since the Federal election meant that investors were now capitalising on rates of sub 3%, which was expected to drive further compression in property yields.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
