What’s happening in the Australian commercial property market?
Over what has been an extremely turbulent time for most markets, owners of commercial property are seeing the rewards of their investment. Over 2021, commercial property sales hit a record high, in most cases surpassing pre-pandemic sales levels. The exception was offices, which was slightly down on 2019 figures.
According to recent research by m3property, all sectors of the Australian commercial market (retail, office and industrial) exhibited strong growth over 2021, with just under $40 billion in sales. Retail was a winner, mainly on the back of large institutional investor sales of prime capital city retail assets.
What is driving commercial sales?
Since the relaxation of our borders, and in increase in partnerships with local fund managers, foreign investors have returned to the commercial property market. Australia has long been seen as a ‘safe haven’ for investors, with a stable government and well-managed economy.
As well, institutional investors such as large North American pension funds continue to prize Australian commercial property. In fact, according to sales reports, institutions comprised 43.3% of sales in 2021.
Investors are mostly from North America, followed closely by Singapore (primarily GCI, the Government of Singapore Investment Corporation that manages foreign reserves). Overall, foreign investors accounted for 19.4% of sales.
What is the best-performing sector?
Industrial as a sector has overperformed, rocketing up the charts over recent years, and 2021 proved to be no exception. Mount Gambier has seen a large increase in demand in sheds greater than 300 square metres. Supply chain interruption has resulted in the need for various industries to bulk purchase and stockpile. This factor, in addition to the growth in online sales, means a greater need for storage and distribution centres, as well as new data centres.
Cashed-up investors in Australia are chasing vacant properties; however, both tenanted and untenanted properties have been achieving excellent results. Now is an excellent time to sell as people with cash offers look for quality stock to hit the market.
However, while the office sector has had a tough couple of years, property experts expect a big bounce back in 2022. While work-from-home trends due to the pandemic weakened the office sector, key property experts have confidence in the performance of offices over the coming year. They expect institutions and superannuation funds will continue to invest in office and other property sectors. However, they will likely focus on issues such as ESG; in particular, air quality and energy efficiency, to choose property in which to invest.
Can we help with your Mount Gambier commercial property?
Call Herbert Commercial on 08 87 250 500 for a complimentary annual investment portfolio assessment. From this assessment, feedback may warrant the need to seek Herbert Commercial’s advice and expertise with formulating a plan to action restructuring or renegotiating the best lease scenario moving forward. We’re here to help.
As the only dedicated commercial property agency in Mount Gambier, we have a network with and are sought after by national commercial agencies as a trusted extension to their services. Our wealth of commercial knowledge of the Mount Gambier market extends to the broader commercial market, meaning we can ensure you achieve your commercial property goals.
