MARKET OBSERVATIONS MAY 2017

After approximately 6 weeks of trading as an Independent,
ANNUITY PROPERTY GROUP is pleased to provide market observations
as to Sentiment, Demand and Opportunity.

This new independent role has opened the door to fresh opportunities
both in brokerage and as a Trusted Advisor to various sectors of the market.

KEY OBSERVATIONS 

Overall Sentiment.

The positive outlook given the low vacancy levels of Office space in Sydney, decreasing incentives and record breaking yields has pushed stronger investment appetite into the Metropolitan areas and also to Regional parts of the Eastern Seaboard. The appetite for Investment stock both passive and value add continues in all sectors with the active buyers including fledgling funds and small syndicates.

We are seeing offshore funds still chasing good product in all sectors and the sentiment is that this will continue for the second half of 2017.

Will there be more yield compression? Yes, I think this is likely!

Demand and expectation.

Demand can be categorised two ways:

1. Long term passive WALE to a quality tenant (either Commercial or Industrial) and an example of this is the Coca Cola 20 year lease back in Qld which is rumoured to be attracting offers in the low 5% yield range.

2. Chasing value add, i.e. not fully leased, in need of capex or repositioning. These buyers will compromise on location, product line and size range to acquire an asset where they believe they can add value. As a result of this, the broader geographical market is offering up all styles of opportunities that may have lain dormant for years. Overall demand is stronger than ever in what is a very tightly held real estate market.

Industrial Land.

Sydney’s Industrial land opportunities predominantly have been in the western M7 corridor in locations such as Eastern Creek, Huntingwood, Marsden Park and Prestons. Rental levels in all these locations are very similar, varying only by approx $5 /m2 and land has followed the same way. Marsden Park, Huntingwood and Eastern Creek/Erskine Park have reported land transactions that have occurred from $450-$550 /m2 of land area which is the result of very strong demand.

Land is in short supply and the buyers have to take a long term view to acquire at these rates for development, with the view to holding the end investment.

Where the opportunities are.

Our view is that the infill suburbs along the infrastructure routes and property east of Parramatta continue to offer mixed use opportunities. The main message is that real estate players need to search in a bigger pool of property from Commercial through to Industrial with perhaps some Retail along the way.

It’s a strong and vibrant market out there that will continue to offer up opportunies for the rest of 2017.

Copyright © 2017 Annuity Property Group Pty Ltd, All rights reserved.

Our mailing address is:
Annuity Property Group Pty Ltd
Level 28 259 George St,
Sydney, Nsw 2000
Australia

 

DISCLAIMER:  This information is of general nature only and prospective lessees or purchasers should seek further information from Annuity Property Group Pty Ltd and obtain appropriate independent expert advice.