Australian Commercial Real Estate (CRE) transaction volumes are at record levels with strong demand from both local and international investors. However, the market is desynchronising with yields in some sectors and markets continuing to compress to record lows, while for others demand has fallen and yields are being challenged.
Does this signal the top of the cycle for the Australian CRE in 2020 and if so, how far might it decline?
In this report Cushman & Wakefield Research reviews three scenarios and their potential impact on Australian CRE for investors to consider:
1. Lower for longer interest rates with moderate growth continues;
2. Australia slips into recession and bond yields fall; and
3. Growth reaccelerates and interest rates and bond yields increase.
Cushman & Wakefield Research views Scenario 1, lower for longer and ongoing moderate growth, as the most likely option. However, under all the scenarios, markets with solid growth potential are likely to continue to attract the most investor interest while markets with a more challenging growth outlook may struggle to maintain value.