Current real estate trends
Posted 17 Jan 14
The Urban Land Institute (ULI) and PwC recently launched their 2014 edition of "Emerging Trends in Real Estate Asia Pacific". This is a useful publication which surveys the sentiment of real estate professionals with respect to 23 key markets in Asia Pacific, including Sydney. The full publication can be read here.
Despite suggestions of a certain degree of weakness in the Sydney office and commercial market segments, the overall sentiment for the Sydney market remains positive, with Sydney ranking 5th out of 23 cities for investment prospects and 11th for development prospects.
Although Sydney is currently the only Australian city to feature in this survey publication we can still extrapolate a degree of this positive sentiment to the WA market and indeed current indicators are that 2014 should be a reasonably positive year for the Perth real estate market.
Confidence levels within the residential market in Perth remain high. Perth was one of the highest performing markets in Australia in 2013 with capital growth levels approaching 10% being reported. Interest levels in well located apartment developments remain strong with a number of high end developments attracting strong pre-sales interest. The rental market has softened in response to softening in the resource sector and this situation is not expected to change in the medium to short term.
There is a lot happening in the hotel sector, with BGC recently unveiling a $500 million development plan for the old Perth Fire Station site on Hay street with Westin (part of the Starwood Group) to operate a 350 room hotel within the mixed use development site. Other significant developments include, but are not limited to, the Crown Development at Burswood and confirmation that Ritz Carlton will develop a luxury hotel within the first development of the Elizabeth Quay development.
In the office sector, fundamentals remain pretty strong, particularly in the Perth CBD where vacancy levels at below 7% are amongst the lowest in the country and with little new supply slated to come on line before the second half of 2015 this situation is unlikely to change dramatically.