NSW MARKET OVERVIEW
NEW SOUTH WALES
NSW Market Overview with Matthew Herrett
How does the property market in (NSW) compare to other states at the moment and what are some key trends that are occurring? The state markets are broadly aligned at present. Strong rental growth, reduced letting up periods, low to nil incentives and land values that have grown considerably over the previous 12 months. Anecdotally speaking, the market may be in the early stages of a state of transition, with the impact of interest rate rises and inflationary pressure for businesses beginning to have some impact. What sectors are most in demand? Warehouse and logistics continue to underpin strong demand. Infrastructure construction continues to fuel engineering and construction demand plus associated services. What do you see as the biggest challenges that face buyers and sellers in todays market? There are several. Supply - It is at all time lows. As a result, critical planning by business is required to allow sufficiently long lead times to locate sites.
Covenant/balance sheet quality is paramount, as the tenant selection
process places significant credence on this. Inflationary pressure overall is a huge challenge for business; property costs are up (net effective rents are up, outgoings are up), interest rates are up, fuel is up, supply chain costs are up, salaries are up. What propensity does a business have to absorb this inflationary environment? Therefore covenant strength/balance sheet comes back to the fore. Who have been key investors over the last 18 months and have you seen a shift from previous years? Not really, investor profile remains largely the same. Private investors driven purely by initial yield shifted out of core eastern seaboard markets as they cannot compete against institutional platforms on pure yield. Privates have moved their attention to others markets such as WA and QLD due to the favourable yield differential. What is your secret to achieving the exceptional results that you have? Our team. We have paid particular attention to selecting staff that espouse the same values as the business owners. If you find
MATTHEW HERRETT Director Link Property Services
32 –October / November 2022
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