THE PROPERTY DEVELOPMENT REVIEW
the high cost of construction, despite the increase in value, these groups have still been selling at significantly below replacement cost. Also given WA has seen net migration of circa 2.8% (the highest in the country), sentiment for this type of asset has been strong. But generally, any asset, with a strong tenant covenant and fundamentals, will still transact at a relatively low yield. Can you tell us about some of the biggest transactions in your state in 2023? As mentioned, activity at the larger end of town has been a little stagnant. Midland Gate Shopping Centre at $465m has been the largest to my knowledge. And then there was our transaction on the corner of William and the Murray Street mall for $48m. Outside of that there has been a small handful of sales in the $20m-$40m range. Mostly shopping centres, CBD retail and office stock. Who were the most active buyer and seller groups in 2023? Was there a depth of off-shore investment and from which countries did you see most investment flow? Well WA has also had strong interest and investment from Singapore and Malaysia. We’ve seen this continue with this buyer group interested in a wide variety of asset types. But we’ve also seen and significant increase in interest from East Coast buyers, seeking a stable market to invest their money. The year wasn’t without its challenges; namely a volatile interest rate environment, building cost pressures, supply chain issues to name a few, but there appears to be some relief in sight. What is your outlook for 2024? For WA the outlook is very positive. We’ve withstood the high interest rate environment well, so should respond to stability. A small reduction in the cost of money combined with a slight adjustment to book value from sellers will create a notable increase in transaction volume. We are forecast to have the highest levels of economic growth and migration in the country. Accordingly our investment lending is already up circa 20% in WA. Which asset classes do you anticipate leading the charge in 2024? Residential, industrial and healthcare. However, there is a number of Shopping Centres hitting the market, which are fortunately are enjoying enough demand, to retain value. Thinking specifically about the development site space, do you see more activity opening up in 2024 given interest rates and building costs seem to have peaked and will most likely stabilise or reduce? Yes absolutely. Demand for the finished product is huge. We are already seeing an increase in enquiry and are selling site, that have previously not been feasible (or saleable). We are definitely seeing an increase in confidence from developers.
November / December 2023 – 133
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