Strong Demand Dominating the Australian Commercial Property Sector
Over the last 12 months, there has been continued strong demand within the commercial property sector (within these markets) in terms of investment activity and tenant demand. The commercial sales summary provides a snapshot of key investment metrics over 2018/19. In particular it highlights the tightening (albeit stabilising) yield bias within the Sydney Metropolitan market and the general convergence of yields between asset grades and locations.
A prime example of this is within North Sydney where the differential yield spread between A and B grade assets has narrowed to as little as 25 – 50 basis points. This differential has proven to be even tighter in some instances within the Sydney CBD. The Parramatta office market continues to perform strongly, reflecting investment metrics generally aligned with those of North Sydney. Meanwhile, sales in non-core Sydney Metropolitan markets have also reflected tightening yields as competition exists between purchasers moving up the risk scale in search of yield. All these factors highlight the convergence story and the relative point in cycle.
This report has been collated as a centralised point of analysis of the key sales. We hope it will be of assistance to both investors and owners alike in summarising recent benchmark investment activity.
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Insights • Economy
Retail sales remain below pre-pandemic levels (Chart I), as footfall in malls continues to be hit by an ongoing capacity limits, border controls and work from home arrangements. From dine-in bans to the cap on group sizes, restrictions in the F&B sector have dealt an even greater blow to the retail industry as F&B establishments are integral to draw traffic to any retail sites.