An artist’s impression of Brisbane’s Queen’s Wharf. Picture: The Star Entertainment Group
An artist’s impression of Brisbane’s Queen’s Wharf. Picture: The Star Entertainment Group

World city here we come

THE Queensland commercial property market recorded another strong year, with offshore and southern investors increasing their presence as a raft of multibillion-dollar infrastructure projects are set to transform Brisbane into a world city.

However, there are challenges ahead in 2019 with the slowdown in the market generated by the federal election and the likelihood of a Labor Government armed with policies set to impact negatively on the property market.

Tighter bank lending requirements, the fallout from the banking royal commission and an uncertain international political and economic climate will also affect the market in 2019.

JLL managing director QLD Geoff McIntyre said 2018 in general was a "positive year", with strong sales, improving leasing outcomes in the industrial and office sectors, rents edging higher and the re-emergence of the resources sector.

"If we look at the macro sense in Queensland we are a year closer to the fruition of the major infrastructure projects, like the second runway, Queen's Wharf, Brisbane Metro, Cross River Rail," he said.

"We're getting this continued global capital looking at Brisbane and Queensland who understand what that level of infrastructure spend has done to similar cities around the world.

"They understand this infrastructure will have a profound impact on Brisbane and the Queensland economy."

Brisbane’s Queen’s Wharf development is among a raft of projects attracting investment in the state.
Brisbane’s Queen’s Wharf development is among a raft of projects attracting investment in the state.

Brisbane CBD investment sales reached about $3 billion this year while of the top 10 deals across Queensland in all sectors, six were bought by offshore investors, either direct or through Australian-based fund managers.

Tourism continued to thrive and an increase in interstate migration, which when added to overseas migration and natural increases, ensured Queensland was the second fastest growing state in Australia, with that growth centred in the southeast corner.

While home prices have plunged in Sydney and Melbourne, some experts are expecting double digit house price rises in Brisbane over the next year. The apartment oversupply is steadily being reduced.

Cushman & Wakefield managing director Queensland Glen Wright described 2018 as "a strong year on every level".

"We saw leasing pick up across the board. Strong interest from southerners coming to Brisbane acquiring industrial and commercial assets. We saw the local players participate in the market also," he said.

"Institutional capital and offshore groups have picked up activity in 2018 in Brisbane and we see this strongly continuing in 2019 as those that continue to miss out in Sydney and Melbourne look to Brisbane to deploy capital.

"The gap between Sydney/Melbourne and Brisbane is closing for core assets and we're also seeing more groups looking at core plus opportunities to try and find a yield and value add play that is harder to find in other cities."

On the downside in 2018, yields across all sectors in southeast Queensland for investment grade assets stabilised and to some degree softened, especially in retail.

The Sunshine State lagged well behind other states on most economic indicators. Economic growth was at 2.6 per cent, state final demand was in negative territory and the unemployment rate was stubbornly high at around 6 per cent.

Mr McIntyre said while he looked forward to a strong 2019, there were a "macro elements" at play with the federal election, debt tightening, the fallout from the banking royal commission and the possibility of a rise in US interest rates.

"These macro events will have an impact, but what's happening on the really positive side for Brisbane and Queensland - being infrastructure, tourism, mining and resources, and interstate migration - will balance out the negative macro issues," he said.

"But put it this way. I'd rather be in Queensland's predicament relevant to some other states because of these very positive things coming through."

Mr Wright believes "cash will be king" in 2019.

"There is still a wall of money out there that still wants to find a home in real estate either directly or via the debt space. The key in 2019 will be getting funding and keeping your loan to value ratios in check with the banks," he said.

"We expect to see a lot of property come to the market in the first quarter as owners look to offload or readjust portfolios before the federal election, which we believe will be in May.

"If we have a change of government, most investors will want to see the devil in the detail around changes to capital gains tax, negative gearing and imputation changes. All these could have a massive impact on investors' decision to hold or sell in the back half of 2019."

 

 

TOP 10 DEALS FOR 2018

1. 80 Ann St CBD ...................................................... office 50pc … $419.2m

2. 61 Mary St CBD ..................................................... office ............. $275m

3. 53 Albert St CBD ................................................... office .............. $252.3m

4. 100 Skyring Newstead ............................................ office .............. $250m

5. Grand Plaza Shopping Centre Browns Plains ........ retail 50pc....... $215m

6. Harbour Town Shopping Centre Biggera Waters ... retail 25pc...... $180m

7. K1 480 St Pauls Terrace Bowen Hills .................... office .............. $170m

8. Homemaker City Fortitude Valley .......................... retail ............... $166.2m

9. The Barracks CBD .................................................. retail/office ..... $162.3m

10. 127 Creek St CBD ................................................ office ................$123.1m

Source JLL/CBRE



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