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Australian property market outlook for 2022 [CBRE Report]

Categories: Commercial, Industrial, Investments, Office, Residential, Retail

Soon, we’ll be a quarter of the way through 2022. But the smoke is still visible from the fireworks of Australia’s 2021 real estate market. Can we expect a similar display in 2022? CBRE think so.

According to their latest report, global real estate giant CBRE are tipping another excellent year for Australian real estate markets. Australia’s Gross Domestic Product, the total value of goods and services produced in a given year, is anticipated to grow between 3.5 per cent and 4.5 per cent in 2022. It’s expected unemployment will fall by 0.5 per cent and companies will take advantage of strong topline growth by hiring new staff and upgrading office space requirements.

We can breakdown Australia’s property market outlook for 2022 by four influencing factors:

  • Immigration
  • Capital flows
  • Residential property prices
  • Commercial rent growth

Yes, there will be bumps, caused by the leftovers of the pandemic, rising inflation, and a crucial 2022 federal election. But CBRE says these challenges may be opportunities for those wishing to take advantage of “strong underlying trends.” Let’s look at those trends in detail.

4 key drivers of Australia’s 2022 real estate market

Immigration

australian real estate market outlook 2022

An Australia-wide population increase will drive demand for both established and new dwellings.

Australia’s speedy recovery in the real estate sector will be driven by the country’s focus on returning residents and skilled migrants.

CBRE expect an inflow of 490,000 migrants by 2024, and this could set the scene for big-hitting achievements in the real estate industry. Immigration is expected to create:

  • 900,000sqm of office space
  • 200,000 dwellings
  • 2 million sqm of industrial space
  • $6.7 billion in retail spending

Don’t forget WA, which is set – finally – to reopen its borders after Premier Mark McGowan’s much criticized backflip earlier this year. McGowan’s broken promise to open the WA border by early-February, which has been closed to the rest of the country since March 2020, delayed an expected increase in residential property prices with a forecasted mass migration set to be the trigger. The border will now open this week, bringing with it thousands of skilled workers and interstate migrants looking for a home in Australia’s most affordable state.

Capital Flows

Investment volumes will rise 10 per cent in 2022 according to CBRE Research.

Foreign investment in Australian commercial property topped a record $16.6 billion in the 2021 calendar year, and international border openings should spark further interest in the year ahead.

There’s also scope, we’re told in CBRE’s report, for $68 billion of inflows by 2024 – from domestic super funds. This is providing asset allocation for these funds returns to its historical level of just over 8 per cent. The inflow could be higher if funds chase the inflation hedge offered by real estate investment.

Residential Prices

residential real estate property market outlook 2022

Residential property values are expected to grow between 5 per cent 10 per cent in 2022.

Real estate values are expected to grow between 5 per cent and 10 per cent in 2022, with Brisbane best positioned to achieve double-digit price potential.

We’ve said it before here at Properties & Pathways, undersupply is a major issue in today’s residential property market. The Property Council of Australia (PCA) have proposed the federal and state governments step in to relieve supply and affordability issues. In the meantime, scarcity is forcing residential property values to go one direction: north.

Commercial rent growth

Office landlords can expect low single-digit rent growth in the coming calendar year. Incentives, CBRE expects, will peak mid-2022 on the back of declining sublease vacancies throughout 2021, as well as growing space requirements for government and smaller businesses.

commercial property outlook australia 2022

Commercial real estate has another exciting year ahead, with new supply coming online for in both office and industrial markets.

Meanwhile, industrial rents should become more reflective of the highly positive demand for the asset class. Rents should accelerate through 2022, according to CBRE, with mid-single-digit growth (or higher) possible.

It’s positive news for real estate investors, especially those who feel a fear of missing out. There is still time to get a foot in the door in the hottest real estate market Australia has seen in years. Another exciting year awaits, with plenty of fireworks expected to shine over real estate investors looking to Australia for their next real estate acquisition.

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