QLD MARKET OVERVIEW
QUEENSLAND
QLD Market Overview with Phil Levesque Reflecting on 2022, what were some of the prevailing trends that you noticed and how did they play out in the market?
the under supply of industrial space and land in Brisbane was peaking. This became a major catalyst for the massive rental rates growth seen last year. As a result, tenants who had intentions to move or buy could not find new premises and had to remain as tenants by renewing leases where they were. It was a landlord market and they were in command. Marketwise, what are you forecasting in 2023 and how will increased lending costs impact the various markets? The increased lending costs effect has already been felt since late 2022. October 2022 to early March 2023 we feel was the adjustment period. This was the delayed effect from the start of the consecutive interest rate rises. Uncertainty and low confidence in the market is what really hurt vendors and buyers alike in late 2022. However, as buyers adjust to the banks’ new requirements for lending and vendors expectations have realigned with the market conditions, we have found that it’s mostly back to business as usual. Some trends we are currently seeing, and are likely to see continue this year, are that valuations take longer to produce and banks are taking more time to get through the credit process. Apart from this, we anticipate the investment market across most sectors to be healthy from a demand point of view this year. Queensland is likely to keep attracting southern buyers seeking 1% to 2% better yields when compared
Drop in appetite for leased investments – In the early months of 2022 we were seeing the tail end of the feeding frenzy. Leased investment were still in high demand with most listings spending minimal days on market. As interest rates started to increase in mid 2022, investors became more hesitant, and confidence started to drop. By October, the delayed effect of the RBA’s actions were clearly visible. Investors were shy to put offers on properties and vendors were still expecting peak of the market prices. This late part of 2022 was a difficult period to put deals together as everyone was adjusting to the new softer yields required to transact and the new costs of debt. Properties on market took longer to transact and negotiations were more complex as a result. Slow recovery of the office leasing market - The Brisbane office market in 2022 was still experiencing the hangover from Covid. The work from home movement created a domino effect from the CBD towers to the fringe office spaces. Demand from tenants was still low. However, as the end of the year neared, some green shoots of a recovery were visible. Some vacancies which had been dormant since the pandemic were starting to find new occupants. We saw a drop in incentives and a slight recovery in the rental rates.
PHIL LEVESQUE Partner, FAL Property Group
& Partner, Industrial Commercial Partners
Under supply of industrial space - By early 2022,
66 –March / April 2023
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