VIC MARKET OVERVIEW
VICTORIA
Lauchlan Waddell , Ben Young, Adele Foott - Colliers
commercial and industrial properties in regional Victoria, particularly from Melbourne and interstate buyers. These purchasers are drawn to the region’s more affordable price points and the potential for higher yields compared to metropolitan markets. Enquiries have rebounded to pre-Covid levels, fuelled by ongoing investment from Melbourne- based investors and developers. Additionally, there is robust local demand driven by businesses expanding in response to continuous population growth and migration to regional areas. This blend of local and external interests is shaping the market dynamics and sustaining the demand for commercial and industrial spaces in the region. How has feasibility for residential development sites been impacted by interest rate instability and building costs in regional areas? And have you seen developers moving away from residential into other sectors like industrial or mixed- use development? Interest rate instability and rising building costs have indeed impacted the feasibility of residential development sites in regional areas. Some developers have shifted their focus from residential to commercial ventures due to the potential for higher returns. Compared to the number of residential units needed to achieve similar profitability, commercial projects offer more attractive investment opportunities. Despite this trend, the demand for industrial sites remains strong, indicating ongoing interest in this sector. Developers are attracted to the potential profitability of industrial and mixed-use developments, contributing to a diversified real estate landscape in regional areas.
Regional real estate market saw a surge in activity and demand during Covid. How have these markets fared in more recent times? During the Covid pandemic, the regional market experienced a significant surge in activity. While this has somewhat softened in Q1 2024—partly due to the early occurrence of Easter making it a challenging period to assess—there is still robust interest compared to pre-Covid times, which is encouraging. In Geelong, there’s currently an oversupply of smaller industrial units ranging from 100-150 square meters, while larger warehouses of 1,000 square meters and above are in short supply, prompting developers to focus on smaller projects despite the higher demand for larger spaces. Bendigo is witnessing substantial population growth, but there’s a lag in the development of big box retail and industrial spaces to match the expanding residential areas. Ballarat is seeing a surge in the development of multi-level commercial properties and large industrial warehouses over 4,000 square meters, driven by a scarcity of A-grade office spaces. Overall, there’s a significant undersupply of office markets across regional Victoria. The demand for satellite offices by national and international firms is growing, as evidenced by KPMG’s recent expansion into Geelong, highlighting a trend towards accommodating staff residing in regional areas. Thinking specifically about commercial and industrial property, where has the demand been coming from? Recently we have observed sustained interest in
LAUCHLAN WADDELL Senior Executive- Colliers Ballarat
BEN YOUNG Branch Manager - Colliers Geelong
ADELE FOOTT Executive - Colliers Bendigo
42 – April / May 2024
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