QLD MARKET OVERVIEW
QUEENSLAND
QLD Market Overview with Adelaide O’Brien
Reflecting on the last 6 months, what were some of the prevailing trends that you noticed and how did they play out in the market? The commencement of 2023 was met with hesitation around the increasing cost of capital, and inflation remaining stubbornly high. As interest rates have continued to increase, this has had an immediate impact on transaction activity, which on a national level in Q1 were at their lowest levels since 2012. This environment continues to cause uncertainty around asset values and has led investors to explore alternative sectors. Nonetheless, the office leasing market in Brisbane has been extremely buoyant for the last 18 months. The activity in the CBD and near-city has driven down vacancy rates and is leading to solid rental growth (4.5% y-o-y in the Brisbane Prime CBD). Marketwise, what are you forecasting in the second half of 2023 and how have increased lending costs impacted the various markets? Higher lending costs are definitely having an impact on cap rates for existing assets. Evidence of new pricing benchmarks are starting to come through in the office sector, which may trigger some interest from buyers who have been sitting on the sidelines waiting for the re-pricing to occur. While recalibration of the market has been slow, valuation evidence from key transactions in the Brisbane CBD and fringe should provide comfort around buying and increase transaction volumes over H2 2023. Residential developers are likely to be active in finding sites for future developments, as buyer demand appears to be returning and vacancy in South-east Queensland is very low. The inhibitor remains high construction costs in the short-term but this may start to subside given the building approvals are very low and commercial development is also getting delayed.
ADELAIDE O’BRIEN Associate Director
CBRE Brisbane Capital Markets
66 – June / July 2023
Powered by FlippingBook