NSW MARKET OVERVIEW
NEW SOUTH WALES
NSW Market Overview with Elijah Shakir Reflecting on 2022, what were some of the prevailing trends that you noticed and how did they play out in the market? The industrial market had a substantial
decisions based on expansion or contraction, some traditional leasing occupiers are considering shifting to owner occupation due to rising rental cost which should see land values stabilize in 2023. Some recent owner occupier transactions are well above cap rate levels so if any property appeals to these groups due to certain infrastructure such as power and location the owner occupiers are proving hard to beat. What market sectors do you anticipate being most in demand over the next six months? We will continue to see strong demand from e-commerce, 3PL, Transport, Food and beverage however there is also a resurgence of manufacturing enquiry which has potential to deliver some large requirements in the next 24 months. Do you feel that associated factors like building costs, supply-chain challenges and market sentiment will improve for developers over the next 6-12 months? For instance, have building costs already peaked? I’m of the opinion that building costs have peaked however unlikely to reverse, what we should see is more competition from builders in some sectors due to project completion and an increased appetite for future development.
change in Western Sydney across 2022. We saw rental growth between 30-40% y-o-y in some sub markets due to unforeseen vacancy levels across the board in NSW. Investment sentiment was strong in the H1/22 however prevailing market conditions such as interest rates increasing saw a shift in investment and transaction volumes over the second half of 2022 which lead to cap rates softening from an investment point of view and land values stabilize in the latter half of the year. Market-wise, what are you forecasting in the first half of 2023 and how will increased lending costs impact the various markets? The rising rate of rental growth should outweigh softening cap rates in my opinion. We have seen some larger institutions sit on the side lines in recent campaigns due to the increasing cost of debt which has led to an increased appetite from high net worth privates and syndicators so the buyer pool has changed slightly. There is still strong demand from owner occupiers who continue to make business
ELIJAH SHAKIR Director CBRE Western Sydney
22 –March / April 2023
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