Australian real estate: Office buildings are always expensive
Australian real estate investment is considered an effective safe investment channel for many foreign investors. However, in the Australian real estate sector, the office space for rent is heating up.
Sophisticated office buildings, sparkling sun-reflecting glass windows are always in the heart of major Australian cities such as Melbourne and Sydney, typically in 2017, the year of high-rise buildings. Melbourne. A new day begins in these buildings that often start with coffee and sandwiches at lunchtime as this is the pace of office workers.
Vacancy rates at skyscrapers in cities have hit record lows (according to the latest Market Research Report on office leasing). In Melbourne, vacancy rates for rental offices have fallen from 4.5% to 3.6%, the lowest in 10 years.
Similarly in Sydney, vacancy rates have dropped from 4.8% to 4.6% in the past six months. Even in Brisbane and Perth – two less developed cities, the vacancy rate for central office buildings has tended to decrease, although this is still higher than in Melbourne and Sydney.
Thus, office buildings located in the center of the city always have a large number of tenants for the convenience of transportation and travel. “Office vacancy is a good measure of economic performance, and Melbourne is clearly Australia’s most valuable city,” said Ken Morrison, executive director of the Australian property council.
“Melbourne is the fastest growing city in Australia. Diverse economy, fast growing and in need of office space. That has spurred development in the construction of office buildings. PCA forecasts office space will increase by 10.5% over the next two years and house prices in Australia will increase nationwide.
In contrast, Sydney’s share in office buildings has not fallen sharply, with vacant office space still meeting the needs of users in the next 1-2 years. Melbourne and Sydney will continue to be extremely expensive office markets in the next few years and that reflects these cities as the growth cities of the Australian economy today, “Morrison said.
Office buildings in the city center are mostly owned by very large financial funds and are listed by stock exchanges such as Dexus and GPT, often with a large shareholder base. However, that means rent will increase for business office tenants, at least until there are new supplies.
The average rent per square meter in Sydney has risen more than $ 1,000 this year, according to Savills Australia. Grade A rents were $ 1,030 per sqm, up 12.6 per cent from the same period last year to June 2018, while Melbourne was at $ 580 per square meter, a modest 6.4 per cent increase. Many business office tenants are looking for new office buildings to minimize office costs as recent announcements suggest that house prices in Australia rise 17 places in the global rankings.
“In the Australian real estate sector, we see high demand for high quality office space, but with medium quality offices, the demand is lower. So many old office buildings will be converted into educational spaces, student accommodation, hotels or apartment buildings to take advantage of the building’s features, “said Morrison.