The past ten years has been volatile for Australia’s commercial real estate sector.Over just the past 12 months, the sector has seen a dramatic fallduring the middle of 2019,along with low returns.But if we compare the total value of transactions in 2019 to 2018, there’s not much difference at all. In fact, year on year it’s been pretty stable.
The office sector has maintained a stronghold in the market with growing demand from foreign investors and businesses.And the good news is that the growing economy has ensured that the sector is gaining momentum into 2020. Overall during 2019 thethe sector experienced a 2.1% growth rate, certainly exceeding CPI, which makes the outlookpositive for the commercial sector.
So, if you have been considering investing in commercial property in Australia, then this is the right time to tobuy, particularly in Melbourne and Sydney.
Let us take a look at real estate market conditions, the trends and what to expect in the year 2020.
Growing Demand
Investment trends indicate an increase in interest for office buildings in 2019, which is a perfect sign for growth in business during 2020. As the amount of transactions has decreased in metro markets, Sydney and Melbourne have taken the spotlight.
The big technology companies are increasing their foothold in the cities due to which the future of the real estate market is looking bright for the office sector. Sydney’s Northwest and Southwest metro rail and Melbourne’s underground suburban rail loop projects are taking shape, which is boosting the confidence for investors. And it’s also expected the supply in CBD areas will increase during 2020-21.
The demand for co-working office spaces is also at an all-time high with the rise in start-ups and self-made entrepreneurs. Similarly, if we talk about the rental yield in Melbourne, with the low vacancy rate and an increase in demand for new spaces, rental returns continue to rise.
So far, if we see the trend, the demand for commercial property is increasing continuing to rise. It is the best opportunity for investors to invest in commercial real estate in Melbourne and Sydney.
Perfect Economic Environment For Investment
Australia’s economy has accomplished a new feat consecutive annual growth for the past 28 years. It has become a low-risk investment region for locals as well as foreign investors. Even the International Monetary Fund has suggested that the Gross Domestic Product of Australia will keep growing by 2.7% every year from 2020 to 2024.
If you are interested to play by the commercial real estate investing rules and take advantage of the steady economy like recovering house prices, the current economics of Australia is the perfect green light for you to make your move.
Significant Growth of the commercial market in 2020
According to a report by Knight Frank, both industrial and commercial real estate sectors will rise to double-digit growth in 2020. The decrease in interest rates and the rulings of RBA is most likely to help in the growth of an investment.
Foreign investments are also expected to come from Europe, Hong Kong and Singapore. Even local buyers will not be far behind and will be showing an interest in the office market.
Overall, with good economic conditions and government taking measures to negate the slowdown, the outlook for commercial property returns in Australia is strengthing. The performace of the real estate sector is sure to grow in the coming year.
