THE PROPERTY DEVELOPMENT REVIEW
On top of this we project the following categories to be active amongst the corresponding investor groups: 1. Value investor - Shopping centres, Grade A and secondary CBD offices 2. Growth investor - Industrial, Residential, Student Accom 3. Quality/low volatility - Premium core CBD office, Residential (BTR, land lease), Large Format Retail, Medical centres 4. Development Sites – Affluent locations and lower density project sites And then from a developer’s perspective, what opportunities exist in your market & how should they be positioning themselves to capitalise on these opportunities. The WA market has been characterised by historically low supply and sustained demand which has led to the strongest price growth in the country over the past 18 months. The strength of the resources sector is fuelling increases to average household income, keeping unemployment levels at record lows and driving skilled migration into the state. Residential developers are poised to feed these record levels of demand but have been restricted by the cost of construction hampering project feasibilities. The standout category for residential development in 2023 were those projects located in more affluent locations or with particularly attractive location features such as ocean or river views. This is expected to remain a focus for developers in 2024. As residential values continue to push higher (WA remains the lowest median house price for any major state), we expect the viability of projects outside of the ultra-premium suburbs and locations to improve, leading to a higher volume of transactions through 2024. Commercial developments have largely been driven by specific tenant or owner-occupier requirements, primarily in the healthcare, office and retail sectors. It’s widely forecast that interest rates have peaked or are near their peak - what impact will this rate stabilisation have on the commercial property sector. We expect the stabilisation of interest rates will lead to increased activity across the board, with the lower yielding asset classes of healthcare, industrial, retail and fuel to benefit the most.
February /March 2024 – 107
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