Canberra registered its strongest start to the year for office transactions since 2017 according to new CBRE research, which highlights heightened interest in office investment opportunities.
CBRE Associate Director, Capital Markets, Tim Williams said over $300 million in assets changed hands in H1 2019 compared to just $53 million in sales in H1 2018.
“The range of transactional activity which occurred, including properties such as the Telstra Building on Mort Street for $109 million, 10 Moore Street in the City at $35 million and 24 Wormald Street in Symonston for $30 million shows that investors have confidence in the Canberra market and are venturing outside of Sydney and Melbourne in search of better yielding assets,” Mr Williams said.
The MarketView report also forecasts an increase in office leasing activity in the current half, after a relatively slow first six months, as tenants delayed decisions until post the Federal election.
“Moreover, with some 60,000 sqm of new office supply being delivered in 2020, CBRE is forecasting above average rental growth in Canberra, particularly in the prime market as there is still a strong flight to quality from most tenants, all seeking more efficient floor plates, better amenity, market leading End of Trip facilities and access to third spaces,” Mr Wiliams noted.
At a national level, CBRE’s Q2 Office MarketView report highlights that Victoria and NSW were the two most active markets in the country in the first half of 2019.
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.
“Volumes were better than expected, registering the strongest start to a year on record as despite the tightly held nature of the major CBD markets, and the difficulty in recycling capital, owners have been willing to sell for the right price,” CBRE’s head of Capital Markets research, Ben Martin-Henry, said.
“This has resulted in further yield compression across all major markets to a national average of 5.2% for prime stock.”
Mr Martin-Henry 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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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.