Overall, the Australian investment market has remained supported by favourable economic conditions underpinned by a significant pipeline of infrastructure investment and continued high levels of population growth, according to the Australian & New Zealand Capital Markets Investment Review released by Colliers International. The report explores key fundamentals of current and future investment across the Office, Retail, Industrial and Hotels markets.
Coupled with record low interest rates, there remains a deep pool of capital from both local and offshore investors looking to expand or enter into the Australian market. Despite rising capital values and tightening capitalisation rates, pockets of value remain available in many segments of the market.
Highlights for the year included the sales of 50% interests in three Super Prime Regional Shopping centres in three separate states, which reconfirmed that high quality centres underpinned by strong catchments and trading performance continued to attract strong yields. Australian retail property transaction levels are expected to remain strong in 2020 with strategic capital looking for opportunities in the market.
The Australian office market continues to be viewed by the global investment community as one of the key markets primed for further yield compression and income growth. Macroeconomic conditions, as well as strong occupancy levels in Sydney and Melbourne and improving ones in other markets, have been the critical driver for the Australian Office market in 2019 and will continue to be the case into 2020. Colliers International expect further yield compression will continue across the national office landscape in 2020, which is a significant change in outlook from this time last year.
Demand for Australian industrial and logistics assets remains significant, with an unprecedented amount of capital seeking to expand or enter the sector. Record infrastructure spending on transport projects, coupled with the continued growth of e-commerce and low cost of debt has underscored demand, particularly along the east coast states where 78% of the Australian population resides.