Australian Real Estate Quarterly Review

Article10 min23 July 2018By Dexus Reseach

Three thematics to define the year ahead

Dexus Research today released the Australian Real Estate Quarterly Review Q3 2018 with a focus on three thematics which will define the year ahead for real estate investors. 

The first thematic is broad based economic growth which is supporting positive occupier demand for space across the office and industrial sectors. 

Net absorption of office space in Australia’s CBD markets was around double the long term average at 90,000sqm in the previous quarter. 

The second thematic is the low and steady cost of capital which continues to support investment demand for real estate. Transaction volumes remain relatively high and values are mostly firming. Official cash rates are expected to remain flat until late 2019. 

The third thematic is the growth in e-commerce which is providing double digit growth in deliveries and creating extra demand for warehousing space in the industrial sector. Online sales lifted 17.2% in the year to May 2018, contrasting with conditions in the retail sector which remain subdued. 

Together, these three thematics create a rewarding investment climate for investors in Australian real estate, particularly in the office and industrial sectors. We expect commercial real estate to continue to perform well in the year ahead after returns averaged a solid 12.6% over the past year.

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