NEW YORK, Nov. 17, 2016 /PRNewswire/ -- Includes 3 FREE quarterly updates
Commercial real estate in Australia has weathered external headwinds from a slowdown in China, global economic uncertainty and a fall commodities prices. This can be attributed to the influx of foreign investment into prime assets that has kept prices buoyant and rental rates comparatively high. However, the surge of acquisitions from foreign investors has led to falling capitalisation rates, primarily influenced by a lack of supply. The current investment climate presents opportunities over 2017, with particular prospects for property managers.
Australia has recently reached a milestone of 25 years without recession, an impressive achievement during a period of global economic uncertainty and falling demand. The successful services sector has kept the Australian economy resilient, while the recent slump in commodities prices and falling demand from China have seen the primary sector come under pressure, seeing demand drop for industrial real estate as a result. High levels of foreign direct investment flows into prime office and retail real estate are expected to continue as foreign institutions seek favourable returns from a budding market - while Western nations suffer from structural issues such as economic turbulence in the eurozone and political uncertainty in the US, investment focus has shifted further towards the more stable Australian economy. Commercial real estate development focus will continue to revolve around established business centres such as Sydney and Melbourne, with luxury retail and office units comprising the majority of demand.
As the construction pipeline is controlled and regulated heavily, new developments will be limited over the coming 12 months, seeing little activity in the Brisbane market as a result. The predominantly industrial market in Perth looks to come under pressure from falling oil prices, which affects exports considerably, and will hence see a fall in demand for industrial real estate units.
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