WA MARKET OVERVIEW
WESTERN AUSTRALIA
Brent Griffiths - Director | Sales | Leasing - Belle Property Commercial
Thank-you for the opportunity to share your insights as part of The Property Development Review publication - walk us through the performance of your business from a State perspective this year, in which divisions have you seen the strongest growth in 2024. Belle Property Commercial Perth is a new entity that’s launched off the back of a much improved commercial market in WA over the past few years. WA is heavily influenced by the resources sector which has previously resulted in Perth being labelled a “Boom Bust town” however, the world changed unknowingly as a result of COVID. Post pandemic we have seen strong activity across all sectors which hasn’t been seen for over a decade. Most notably would be the Industrial sector which has seen record low vacancy rates, increased rental values and demand for Owner Occupiers and Investors, but we’ve also seen the vacancy rate drop in core CBD Office markets with tenants looking for quality in their buildings and moving to newer premium stock with better incentives. Retail has remained buoyant within fringe suburbs due to people becoming parochial with a newly adopted ‘work from home’ culture where people are wanting better quality offerings in proximity such as their local café, gym, or supermarket. In summary, I believe the Industrial sector will continue to perform strongly, while investors may seek undervalued counter- cyclical assets such as Office or value add Retail opportunities. And then in terms of the key thematics driving investment into your State, what
have been the key considerations made by sophisticated investors & developers when deciding where & how to allocate their capital from a real estate standpoint. I feel it’s a fairly simplified equation for investors as dollar-for-dollar there’s more bang for buck in WA than our Eastern states counterparts, for example I recently sold a dual income Office asset on an 8.4% passing yield where the buyer then packed his bags and moved his family to greener pastures (Perth) as the affordability for housing and opportunity in WA outweighed options in his home town of Sydney. The equation for developers however isn’t as easy, whilst land rates have remained stable across the majority of Perth, the escalation in cost of construction is brutalising the margins for developers, for example its shown that if a developer was given a parcel of land the project still wouldn’t make any money. That being said we’ve seen some groups in WA that’ve been able to capture the upper end of the market where the “baby boomer/ right sizers” have sold down their homes and purchased rather lavish apartments in mostly Western Suburb locations. I personally would like to see more affordable opportunities in lesser preferred locations that appeal to the first homeowner markets or entry level businesses but this would need government intervention to see it feasible. Recently, there’s been a strong re-bound in market activity & transaction volumes-how are you seeing this play out at ground-level & what has been the prevailing sentiment echoed from key clients.
BRENT GRIFFITHS
136 – August / September 2024
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