VIC MARKET OVERVIEW
VICTORIA
VIC Market Overview with Tim Grant
What are the biggest challenges facing Developers today, and how can they overcome them? Some of the biggest challenges in the current market are significant increases in construction costs, supply chain issues, access to trades people and continued interest rate rises over the past 12-18 months. We are currently talking with several developers who originally had planned a residential development on their site but are now considering office (leasehold or strata) as a viable outcome. Savills research indicates that office occupancy rates are continuing to rise with quality modern office buildings in well located areas being well received. This is providing developers with a level of confidence to ‘flip’ their projects to office and capitalise on the market. We have also seen a significant increase from owner occupiers in the Fringe and Metro markets of Melbourne looking to acquire their own office within new standalone or strata office developments. How do you predict the market will behave in 2023? 2023 will continue to be a challenging market with a number of headwinds to navigate through but with these challenges come opportunities. Although we believe we are almost at the peak of the continued interest rates rises and building costs have plateaued, we anticipate developers will still take a measured and cautious approach to the market over the course of this year. We anticipate an increase in properties coming to market in the latter part of this year and into next year, therefore providing more opportunities for buyers in both the development and investment sectors.
TIM GRANT Director CBD and Metropolitan Sales Savills Australia
50 – May / June 2023
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