The Australian commercial property market is showing signs of recovery, with a significant bounce-back in investment sales volumes observed in the second quarter of 2024. This resurgence comes after a period of uncertainty caused by interest rate rises and softer economic fundamentals.

Key Highlights

Investment Volumes: Investment in office, retail, and industrial markets topped $7 billion in the second quarter of 2024, a 60% increase from the first quarter.

Sector Performance:

• Office market: $2.7 billion in deals

• Industrial sector: $3 billion in investments

• Retail: While subdued in the first half, outlook remains positive

Foreign Investment: Offshore buyers invested $2.8 billion in the first half of 2024, compared to $3.2 billion for all of 2023.

Investor Types:

• Private capital: Behind about $2.25 billion worth of purchases

• Superannuation funds: Invested $1.96 billion

Notable Transactions:

• Sydney: Mirvac sold a two-thirds stake in the planned $2 billion 55 Pitt St tower to Japan’s Mitsui Fudosan

• Cbus Property bought a half interest in 5 Martin Place, Sydney

• Brisbane: Quintessential purchased 240 Queen St

• North Sydney: Barings acquired 40 Miller St

Market Sentiment:

• JLL estimates approximately $28 billion of total volume in 2024, up from $19.4 billion in 2023

• Prime yields were stable for the first time since Q1 2022, indicating settling market sentiment

Regional Performance: Sydney led the way in terms of major transactions

Future Outlook:

• Experts are cautiously optimistic about the shift in sentiment

• Deal timeframes are expected to remain longer than usual

• The next few quarters are seen as an ideal time for counter-cyclical investment, particularly in core plus and value-add spaces

Industrial Sector: Showing a strong bounce-back, with fund managers now placing capital raised over the past few years

Office Market: Deals are being struck at a 15-20% drop on peak book values, potentially indicating a market trough

While challenges remain in the global macro environment, risks are being priced in, and more investors are looking to Australia for stability, growth, and interesting investment opportunities.

Source: This article is based on information from RealCommercial.com.au

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice. Before taking any action, consider your own particular circumstances and seek professional advice from the expert team at Park Avenue Finance.