Dynamic Times in Property - a look at 2017 and what to expect in 2018

In 2017 the Sydney property markets have provided mixed messages. The following summary is what we have and are seeing at present.

Commercial Office - Supply tightened in all markets due to

1. Business expansion due to strong economic conditions.
2. Rents have grown in last 12 months but good incentives still achievable.
3. Decreases in stock due to conversion to residential and infrastructure resumptions.
4. Commercial market to remain stable in 2018.

Mixed Use Development - Tougher Bank Funding and Lots of Supply due to Settle

1. Experienced developers are maintaining strong banking relationships albeit banks seeking more security.
2. Flight to quality by purchasers and developers (location).
3. More DA approved sites being sold indicates tough borrowing conditions for many developers.
4. Large developers seeking major sites with strong infrastructure alignment (Airport, Rail, Roads).
5. Weaker sales and value correction for projects in poor locations and or high density areas in 2018 (both sale and rental prices).

Large Format Retail - Large Rental growth but is it sustainable?

1. Rents have increased in this sector more than any other sector in 2016/17.
2. Many LFR tenants rely on housing development for success.
3. Household debt remains an ongoing issue for sales in this sector.
4. Rents may drop in 2018/19 with predicted challenging times for retailers based on expected flattening of the residential development market.
5. Long term outlook remains strong as new infrastructure will help drive retail sales in this sector

Industrial - Consistent demand and tightening supply

1. Strong business growth has seen larger space requirements.
2. Industrial close to CBD's have experienced some strong rezoning upsides.
3. Logistics continues to be a large focus as shopping patterns change.
4. Expected rent growth in 2018.

Retail - Tough Times Ahead?

1. The retail sector has retained high rents in 2017.
2. Parts of the retail sector has suffered in 2017 due to household debt, internet shopping growth, unsustainable rents, global competitors.
3. The trend will worsen unless household debt reduces across households.
4. Expected rental decreases in 2018 and increased retail insolvency in certain sectors.

Endeavour Property Advisory's sound strategic advice and knowledge is helping many of our clients position their property to create or retain value in changing market conditions.

We look forward to catching up for a coffee to discuss your needs. Andrew Gibbons 0411 261 605