THE PROPERTY DEVELOPMENT REVIEW
investors who are left with significant vacancies because of tenants upgrading their accommodation. It presents an opportunity to add value to the asset by repositing the property. This may be in the form of capital works upgrades to the plant, foyers reconfiguration, and refurbishment of the office accommodation. These upgrades and future proofing of assets then lead to a refresh of the property and therefore a new offering in the market for tenants. What are you seeing transact in the development market? (Blake) You’ve got a really strong residential market, that has maintained a strong level of pricing, but you’re faced with an increase in the cost of construction debt. That’s the biggest point of contention in the development site market. So, you’ve got a real mismatch between vendors and developers, as vendors are reading the side of the market where the end sale rates are very strong, and developers are reading another, as they’re trying to mitigate their risk in future construction costs, and that comes down to land price. It hasn’t stopped site sales in Brisbane, I must say. We are still
seeing interest in a lot of those larger sites, and that’s because a lot of the buyers for those particular opportunities are taking a longer-term view. They’re banking on construction costs eventually settling down over the next few years as the supply chain catches up to demand. How are the 2032 Olympics affecting the commercial market in Brisbane? (Matt) You could see in Sydney prior to the 2000 Olympics a tangible growth in both residential and commercial, and that’s happening now [in Brisbane]. The Olympic games provide the need and the opportunity to significantly enhance Brisbane’s transport and social infrastructure. We’re seeing a lot of key developers and investors identify sites in-and- around the precincts that will be exposed to the Games. This is all contributing to real growth in the commercial market. We’re confident that we’ll also see interest climb as the Olympics get closer. The property industry has an important part to play in the race to the 2032 Olympics and will be key to making the most of the opportunities presented over the next decade and beyond.
What are the opportunities that you are seeing for investors? (Blake) In the office sector specifically, opportunities are going to come from just waiting. I think that will allow the market to adjust to the rapid change that we’ve seen in the first few months of this year. There will obviously be a continued flow of transactions that occur, but opportunity for people is more buying at the right price, and given a lot of book values are sitting reasonably high off the back of record yields, it’s going to take the market some time to consume that and adjust their level of pricing, and understand their strategy moving forward. That’s where buyers will find opportunity – in the first half of next year. That’s when they’ll be able to pick up assets at or slightly under market value.
SCAN OR CLICK TO LISTEN TO THE INTERVIEW IN FULL
20 MINUTES
Summer 2022/2023 – 89
Powered by FlippingBook