Leasing & investment activity fuels upswing for QLD

15 May 2019

Savills Research recorded a turn-around during the first quarter of 2019 with the Brisbane CBD moving into an upswing cycle with increased leasing activity and stronger investor support.

Savills Quarter Times Report has recorded a steady start to the year with the Brisbane occupier market recording net effective rental growth of circa 2% emerging across varying grade quality of buildings. The report also highlighted yield contraction over the 12 months to March 2019 of circa 25bps across A and B Grade assets.

Savills Managing Director, Anthony Ott said that the research reflects a strong start for the year.

“Investment activity across the first quarter was in excess of $1 billion worth of CBD office assets transacted or formally being offered for sale with at least another $1billion worth of assets earmarked for sale during the second quarter.

“This follows on from a strong 2018, where sale volumes in the Brisbane CBD totalled circa $2.3 billion,” Mr Ott said.

According to Savills Research, asset values of properties formally marketed in the first quarter of the year were up approximately 50% on the corresponding period in 2018.

“There is positive investment sentiment given the level of activity not only in the CBD but also the fringe and suburban markets and this is continuing to flow through in the second quarter with a number of owners positioning to divest,” Mr Ott said.

Comparative value of Brisbane assets relative to Sydney has been a key factor in driving increased investor demand.

“There is a capital value spread between Brisbane and Sydney of approximately $10,000 per square metre and a yield spread of approximately 115bps, so the metrics are pretty compelling,” Mr Ott said.

Mr Ott said that new projects and infrastructure activity such as Cross River Rail, Brisbane Metro, Queens Wharf, the second runaway at Brisbane Airport, and the Howard Smith Wharves development will all have a positive influence on investors perspective over the next 5 -10 years.

“These major projects are giving investors’ confidence that Brisbane is entering a new growth phase,” he said.

 
 

Key Contacts

Anthony Ott

Anthony Ott

Managing Director - QLD

Brisbane

+61 (0) 7 3002 8904