News & Info

The Road Ahead – 2014 Property Outlook

Adam Turnbull – Colliers International

National Overview

Strong investment conditions were the defining feature of 2013 with Australian property continuing to attract increasing levels of capital, both from Australia and offshore. Although there were high levels of foreign investment, the institutional clients were the biggest movers of 2013.

Global conditions are predicted to have continual improvement over the coming year. A boost in global growth will be a positive for the Australian economy and will provide a significant boost to confidence.

The return of confidence in the housing market will provide a much needed boost to consumer confidence. This will have flow on impacts to many sectors including retail, office and industrial which in turn will drive consumer confidence and spending.

Improved leasing conditions across all sectors

It’s no secret that the last two years have been characterised by poor leasing conditions in all sectors with net effective rents dropping in most markets.

In all markets, we are cautiously confident that we will see a recovery in rents and are predicting modest rental growth across all sectors. This will primarily be as a result of improved business confidence following better economic conditions offshore, an improving housing market and a return of consumer confidence.

Shift in buyer profiles

The buyer group experiencing the strongest growth over the past five years has been offshore investors. It is therefore interesting that in 2013, this began to change with domestic investors re-entering the market at a rapid rate.

Primarily major property institutions with their unlisted funds were particularly active.  In 2013 this group this group accounted for over $3.3 billion of total transactions. This is higher than what was experienced in 2007 and more than double the 2012 level.

Offshore buyers are however still active although there are a number of changes that are occurring to the types of buyers targeting Australia. Right now, most of the offshore money is coming from Singapore, Hong Kong, Europe and North America. Australia remains attractive and in some ways is becoming more so for a new emerging group of investors.

Summary

Strong investment conditions were the defining feature of 2013 with Australian property continuing attracting increasing levels of capital, both from Australia and offshore.

The improved leasing conditions, return of the institutional clients and the increased global confidence all point towards a great 2014 for property in Australia. Colliers International are positioned well to take advantage of these opportunities and ensuring their clients reap the benefits of the rapidly changing markets.

Adam Turnbull works in Investment Sales at Colliers International Parramatta. He has over 10 years experience in the real estate sector including sales, property management and project management. 

Please note the opinions expressed in this article are not those of Scott & Co, this article is provided to the reader by Scott & Co as an interest piece only.

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