WA MARKET OVERVIEW
WESTERN AUSTRALIA
Derek Barlow - Director, Metropolitan Investments CBRE - WA
Looking ahead to 2024, what’s your outlook for the commercial property sector. With interest rates projected to stabilise and potentially decrease through 2024, WA’s economy continuing to perform strongly and a weight of capital growing impatient on the sidelines, we are expecting to see elevated transaction levels, particularly amongst private and syndicate investors. The Perth office market continues to be defined by a buoyant leasing environment, which combined with a lack of new supply, is likely to see more favourable rent and lease terms achievable in the coming years. This is likely to underpin renewed interest in the sector H2 2024 and beyond. Development site activity will remain focussed on residential projects more affluent suburbs where price elasticity on end-product apartment values can sustain the increases required to make projects feasible. Future supply looks weak. Residential and shopping centre supply is running at 50% of the level seen in 2017-18. We saw tightening of sub-lease space in four out of five office markets and anecdotal evidence suggests sub-lease continues to be pulled. For office specifically, we expect to see very healthy CBD visitation rates in Feb and March - peak days almost back to 2019 levels. This should remove the structural adjustment question from the table. Reflecting on conversations with buy-side clients, what’s their sentiment & what’s the profile of buyers you’re expecting to be most active this year. 2024 has commenced with increased levels of enquiry across investment and development stock, with Buyers buoyed by the stabilisation of interest rates and anticipating a more balanced market in the year to come. Private buyers are seeking value-buying opportunities for retail, childcare, fuel and industrial. Development and value-add buyers are being driven by specific lease catalysts, owner-occupation mandates and opportunistic buying in tighter markets. What are the fundamentals investors are looking for prior to deploying capital in 2024 & which asset classes do you anticipate will drive transaction activity. We expect to see location being a major qualifier for buyers across all categories given the selection of opportunities currently available. This is an opportunity for buyers to secure a holding in locations that are traditionally tightly held.
DEREK BARLOW
106 – February /March 2024
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