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Eye On The Market: Perth CBD Office

3 October, 2018
Categories: Commercial, Investments

In our latest report, we show you how Perth CBD’s office market is set for recovery thanks to growth in jobs, investment appetite and occupancy rates.

Perth’s CBD office market emerges from bottom of cycle

Ripe for investment

  • Investment volumes in office property are more than three times the value recorded this time last year – and the highest level recorded in the market since June 2013.
  • Foreign and domestic investor appetite is owed to confidence in the leasing market, as Premium space vacancy rates and tenant incentives taper off.
  • Counter cyclical investors are recognising Perth as a solid investment compared to the Eastern seaboard. Market yields in the Perth CBD are between 5.75% and 7.00% for Premium grade buildings, while the difference in capital values for Perth and Sydney CBD markets have never been this high.

Jobs, jobs, jobs

  • WA is seeing some huge investment activity in its mining sector. BHP plans its largest annual production iron ore mine and FMG commits $1.7 billion to a new mine in Eliwana. The impact of these projects alone is over 5,000 new jobs in WA thanks to Perth CBD’s largest tenants.
  • Australia’s largest year-on-year growth rate for office job advertisement goes to WA (18.3% in the 12 months to June 2018). This is a clear driver of tenant demand in the Perth CBD and is the highest rate reported since 2012 when mining investment was peaking.

Vacancy rates headed down

  • Premium grade office space in Perth now has a vacancy rate of 4.1% (compared to the national average of 9.2%). This is its lowest since June 2014.
  • Savills Research calls Perth CBD’s three consecutive periods of positive net absorption as one of the most telling signs of recovery. Owed to tenant demand, it’s the first time this has happened since 2012.

What this means for investors

Perth CBD’s office market is seeing clear signs of growth, flight to quality and investment opportunities. While parts of the eastern states still present counter-cyclical prospects, ears should firmly be on the ground for west coast acquisitions which suit investor strategies and benchmarks.

Properties & Pathways is a dynamic commercial property investor in Australia. For advice on how to invest in one of our syndicates, get in touch today.

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