According to the National Australia Bank, rising interest rates and the difficulty of obtaining a loan will keep commercial property prices low well into 2023. The NAB Commercial Property Index found it has become more difficult to obtain debt or equity funding in 2022, and there was an increase in the number of people who believed that debt and equity financing conditions would worsen in the next six to twelve months.

Confidence Levels

According to The Australian, confidence in the office sector has declined across the country, with a very negative outlook for the next 12 months for many states. Retail confidence was higher along the eastern seaboard, and industrial confidence continued to outperform the market in all states. Industrial capital growth is expected to outpace growth in other sectors over the next one to two years.

Concerns

Deloitte’s 2023 commercial real estate forecast states that most global real estate leaders are concerned about the economy as they plan for the rest of 2022 and 2023. Revenue expectations for 2023 are mixed, with 40% expecting an increase, 48% expecting a decrease, and 12% expecting no change (80% expected revenue to rise in 2022). As a result, more respondents plan to cut costs this year compared to last year, when only 6% planned to do so.

Influences

Respondents to the Deloitte’s 2023 commercial real estate forecast indicated that sustained high inflation, workforce management, cyber risk, and climate-regulated regulatory action will have the greatest impact on revenues in the next 12 to 18 months.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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In 2021, house prices in Brisbane went up at the fastest rate in 13 years. Though growth slowed in other parts of Australia in the first half of 2022, Brisbane’s housing market continued to do well and unlike in Sydney and Melbourne, prices in the city are still much higher than they were a year ago.

As of November, the median house price in Brisbane was $817,684. This is a drop of 2.2% from the previous month and a drop of 6.2% from the previous quarter. But compared to a year ago, house prices in Brisbane have gone up by 8%.

It’s the same for units. The median unit price in Brisbane is $494,785. This is 0.9% less than last month and 1.2% less than the previous quarter, but it is still 10.7% higher than the same time last year.

What to expect in 2023?

The residential real estate market is expected to start growing again in 2023, and signs of this are already prominent across Brisbane.

Christopher’s Housing Boom and Bust Report 2023, released at the end of November by SQM Research, found that housing prices in Brisbane will increase by 5% in 2023. Due to uncertainty about interest rates and inflation, earlier forecasts stated we could expect drops in Brisbane and other parts of Queensland in 2023.

The SQM report also states that renters would have it worse in 2023 until the end of the year, when the number of completed homes goes up, the number of new homes goes down, and more renters buy their first homes. Rents are expected to increase even further, by between 8% and 13%.

And beyond?

When we consider the Australian market in general, Brisbane is likely to be one of the best performing real estate markets over the next few years. There are many areas of Brisbane that have strong growth potential, and as the Olympics gets closer, development is set to increase further, improving infrastructure and setting the path for the delivery of more properties.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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• Increase in materials cost

The cost of materials is rising and there aren’t enough of them. This is especially true for wood, where states such as Victoria have promised to stop logging native trees by 2024. Not only that, but bushfires and floods have caused waves in supply as well, destroying thousands of acres of trees.

As a result, builders must rely on imported wood, which is more difficult to find and costs nearly twice in 2022 compared to three years ago.

• Labour shortage

With closed borders over the past few years, and at the very least, airlines making it difficult to travel still in 2022 (prices are through the roof for some destinations), we’ve had a shortage of good labour in the country. Prior to COVID-19, Australian construction firms could hire workers from Ireland and New Zealand to fill gaps in the skilled trades industry – and they were more affordable. To keep Aussies working, however, wages have had to increase.

• Volatility

In 2022, some of Australia’s biggest name building companies have gone out of business – namely due to a rise in demand for homes, lack of building materials and lack of workers. Increased production costs have put many companies in debt, and this is backed by the Australian Bureau of Statistics stating that before COVID, the average cost of building a home was about $320,000. In 2022, that price has gone up to around $475,000.

Where to from here?

According to Master Builders Australia, even though short-term problems like rising interest rates and inflation will have an impact in future, the construction industry will grow steadily over the next few years, although growth will look very different in each subsector (civil and engineering, non-residential, and residential construction).

The outlook for non-residential building activity (social, cultural, retail, commercial, and warehousing) is good, with a small drop in 2023 and a steady rise from 2024 to 2026. For residential, long-term growth of the population means that 200,000 new homes need to be built every year. Australia is unlikely to reach this goal until 2026.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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Despite ongoing pressure on household budgets, Queensland’s Retail trade has remained remarkably strong throughout the year, recording its 9th straight month of growth. Queensland’s seasonally adjusted retail turnover has increased by 9.7% over the past 12 months.

Australian hospitality businesses are set to benefit the most from the imminent Christmas spending spree, with trade volumes forecast to increase by 16.3% to $9 billion.

Regardless of the strength in our recent retail trade data, it is our view that the impact of continued pressure on household budgets is understated, and therefore retail sales volumes will weaken significantly post-christmas.

The Household Savings Ratio, which measures Household Savings against disposable income, is falling rapidly. Household Income is expected to remain steady but as the cost of living increases, the ratio will fall further as household access their savings to pay for the essentials, leaving less and less in the budget for the finer things.

This is reflected in Westpac’s November Consumer Sentiment Survey, which shows sentiment has fallen 6.9% over the past month and is now below the low-point of the GFC. The drop in confidence can be attributed to the threat of sky-high energy prices and a stubborn inflation figure which continues to defy the RBA’s strategy. As interest rates, fuel prices and residential rental rates continue to rise, it is our discretionary spending (i.e. Luxury Retail, Fine Dining, Entertainment) that suffers eventually. Non-cyclical industries (i.e. Grocery, Fuel, and Alcohol) will remain in high demand.

Hence, Retail assets are not exempt from the overarching “flight to quality” thematic that we are seeing play out in the wider market. As discretionary spending is impacted more and more by the cost of living, interest will gravitate towards essential retail offerings with strong anchors. We are seeing investors and developers flock to assets or development opportunities anchored by Quick Service Restaurants (QSR’s), grocery and fuel as they are seen as essential, regardless of the strength of the economy or what stage of the interest rate cycle we are in. This is happening despite there being higher rental income on offer for lower quality covenants, with landlords who opt for higher quality covenants and lower income being rewarded with a much sharper capitalisation rate on valuation.

In summary, the forced savings created by lockdowns, as well as the financial aid provided by the government throughout the pandemic, is largely responsible for pushing sentiment and inflation into unreasonably high territory, the effects of which have only been exacerbated by Covid-related supply chain issues and conflict-affected energy prices. In response, the measures Central Banks have put in place to contain inflation continues to apply pressure on household budgets, which is resulting in consumers losing confidence and withdrawing from non-essential spending.

​​​​​​​ Lower household disposable income with the risk of ongoing energy, supply chain and labour market issues, means you should be selective with the retail assets in your portfolio and ensure you are well positioned to meet the demands of a changing market. There’s a storm brewing!

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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Regional Guarantee for First-Time Home Buyers

The government will help 10,000 eligible first-time buyers in regional Australia buy a home every year by guaranteeing up to 15% of the price.

Helping Veterans Buy Their Own Homes

The Defence Home Ownership Assistance Scheme will be made bigger with the help of $46.2 million from the government. This will help veterans and members of the Australian Defence Force buy a home by paying for their monthly mortgage interest payments.

Help to Buy

Under Help to Buy, people who qualify will be able to get an equity contribution that will help them buy a home with a smaller down payment and a smaller mortgage.

Downsizing

The government is giving people aged 55 to 59 years more time to make downsizer contributions to their superannuation. It will also remove the sale of a home from the pension asset test for another year.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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For Queensland, this includes $586.4 million to upgrade the Bruce Highway through Brisbane’s outer northern suburbs and $210 million to upgrade the Kuranda Range Road.

In other states:

• New South Wales, $500 million for corridor acquisition, planning and early works on high-speed rail between Sydney and Newcastle; and $300 million for the Western Sydney Roads Package.
• Victoria: $2.2 billion investment in the Suburban Rail Loop East over the next 5 years; $125 million for the Barwon Heads Road Upgrade – Stage 2.
• South Australia: $400 million for upgrades to the Dukes, Stuart and Augusta Highways; and $60 million to deliver on and off ramps to the Southern Expressway and Majors Road interchange.
• Northern Territory: $350 million in additional funding to upgrade and seal the Tanami Road and Central Arnhem Road; $332milliontowards the NT Strategic Roads Package, including upgrading the Santa Teresa and Mereenie Loop Roads
• Australian Capital Territory: $85.9 million in funding for Canberra Light Rail Stage 2A
• Western Australia: $400 million to upgrade the Tanami Road$125millionfor electric bus charging infrastructure in Perth
• Tasmania: $540 million to upgrade Tasmania’s key road corridors, including the Bass and Tasman Highways

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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A National Housing Accord

Under a new national Housing Accord, the government is bringing together the states and territories, the Australian Local Government Association, investors, and people who work in the building industry. The Accord sets a goal of building one million new, well-placed homes over the next five years, starting in the middle of 2024, when capacity problems are expected to get better.

Under the Accord, the Government will give $350 million over 5 years, along with ongoing payments over the longer term, to build 10,000 more affordable homes. States and territories will also help pay for up to 10,000 more affordable homes. This brings the total number of homes that can be built with the help of the Accord to 20,000.

National Housing and Homelessness Plan

In addition to the Accord, the Government will make a National Housing and Homelessness Plan to outline other actions and longer-term changes. The Plan will be made with the help of the states, territories, and other important groups.

Housing Australia Future Fund

The Government put $10 billion into the Housing Australia Future Fund. The Accord builds on that. With the money that comes back from the Fund, 30,000 new social and affordable homes will be built over the next 5 years.

National Housing Infrastructure Facility

The government is also making changes to the National Housing Infrastructure Facility so that it can use the $575 million it already has in a more flexible way. This will help make way for about 5,500 new homes.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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A small retail asset at 465 Waterworks Rd, Ashgrove, home to the beloved Old Salty’s fish and chip shop for nearly 50 years, has been successfully sold at auction. The fully leased three-tenanted property attracted significant attention during the marketing campaign led by McGees Property’s Nina Brailey and Justin Clarke.

The campaign generated 40 inquiries from high-quality passive investors and small developers, resulting in competitive bidding. The property’s new owner, connected to the neighbouring dentist, secured the site with a final bid of $1.58 million. The 640 sqm site includes a 211 sqm building occupied by Niggles & Knots Remedial Massage, Old Salty’s, and Mac And Lulu Hair, with eight car parks at the rear.

This sale highlights the effectiveness of a targeted marketing strategy. “A refined marketing strategy created strong and competitive bidding for the property,” said Nina Brailey. The auction saw five registered bidders and 22 bids, ultimately leading to a successful sale. The new owner, a passive investor, now holds a valuable asset with potential development approval (DA) upside.

Nina Brailey’s expertise and strategic approach were key to this sale’s success. Her understanding of the local market and ability to attract quality investors made all the difference in achieving this remarkable outcome.

Brisbane’s office market continues to show signs of recovery in net absorption and occupancy rates, assisted by a lack of new supply coming online and more workers returning to traditional office hours.

Driven by significant population growth, major infrastructure investment, and a 13-year low in unemployment, the immediate future looks bright for our CBD. However, there is still a considerable risk to this outlook.

A stubbornly high inflation figure and the ongoing conflict in Europe are dampening the outlook to a degree. In addition, the elevated cost of construction materials and the shortage of trades are also significant.

Prime Gross rents have increased by 3.40% year-on-year, but incentives offered remain incredibly high at circa 40%. Vacancy has fallen to 14% across the sector as the uptake of Prime office space continues to strengthen, primarily due to significant pre-committed leases being secured by major tenants.

New supply will be limited between now and the back end of 2024, with only refurbished space coming available. Brisbane tenants absorbed 44,000m2 of office space from January to July this year, which put our absorption rate well above historical averages. Given the lack of new supply coming online in 2022 and 2023 and the fundamental economic tailwinds at play, demand should remain strong.

“Despite the ongoing impacts of the pandemic and trend towards greater workplace flexibility, quality office space in Brisbane remains in high demand.” (Jen Williams, PCA)
We have seen subdued sales activity and a slight softening of yields, albeit based on very few recent transactions. As a result, investors are taking a cautious approach until the top end of this interest rate cycle becomes evident.

The rapidly rising interest rate is putting pressure on many investors. Traditional “set and forget” landlords are faced with the decision to either complete major works to bring their asset up to standard or endure significant vacancy and offer even larger incentives to meet cash-flow requirements as tenants flock to prime offerings. This has led to a significant increase in discussions around value-add and repositioning opportunities as cashed-up investors look for distressed assets to add to their portfolio.
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Construction headwinds have drawn many developers into refurbishing/repositioning existing assets to keep their pipeline active. The major developers are still in the market for office development sites but are taking a more long-term view regarding their construction schedules and development programs.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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The positives

To start with, the medical centre market remains largely unimpacted by changes to the economy like residential or retail investment. No matter what’s happening financially around the globe, people still need doctors and dentists, chemists and day surgeries.

Medical centre tenants are generally more stable, and more likely to stay for longer periods of time.

The negatives

They’re not cheap. Yields are often lower on medical centres, reflective of reduced risk.

As mentioned, tenants are generally more stable, but when they do leave, they can be harder to replace. And if you replace them with someone who isn’t in the medical field, the value of your property could decrease.

When choosing a centre

Make sure the area doesn’t have too many buildings that are zoned for medical use, that way there’ll be less competition and you’ll attract longer term tenants.

Always ensure you know what comes with the sale and what doesn’t, and make sure you do your research.

Finally, negotiate. Be sure your advisors know the local area and understands the market. They will be able to tell you what the property is worth and give advice on what you should be paying – and what that price will give you.

If you’re on the hunt for a medical centre, get in touch with the team at McGees today to discuss.

For a complete list of weekly commercial transactions in Queensland, visit McGees Wrap Up | McGees Property Brisbane

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. While we strive for accuracy, we make no guarantees regarding the completeness or timeliness of the content. Always seek independent advice before making any financial or real estate decisions. We are not liable for any loss or damages arising from your reliance on the information provided.

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