Australian commercial real estate values are expected to hit record heights over the next few weeks, with the commercial property industry reaching its peak as it enters into the final quarter of 2015.
According to the Commonwealth (CBA) Spring 2015 Property Insights Report, Australian investors are expected to react to record prices in commercial property and are predicted to invest over $5 billion in commercial real estate before the year end.
The CBA Property Insights report forecasts the total value of major commercial transactions will jump to $10 billion in the second half of the year, indicating continued growth across all sectors and closing the year end with a total of value of $20 billion.
MMJ Real Estate Chief Executive, Chris Johnson said the final quarter of the calendar year has traditionally been a strategic period for property investors to recycle capital before the year end.
“At this time, the final quarter of 2015, we would normally expect property investors to sell core assets to make way for new investments before the end of the year. Most big transactions in the office sector tend to take place in the last quarter," Mr Johnson said.
“Presumably due to record low interest rates, increased demand and market competition, which has led to increased transaction activity and record prices, we expect to see Australian commercial real estate nearing the top of the cycle."According to the recent Property Council Consensus Forecasts Spring 2015 Report, the lower Australian dollar is further supporting the demand for Australian commercial property, particularly from foreign investors.
Furthermore, the strong yields offered by Australian commercial property compared to financial assets are encouraging investors to look to broaden the scope of exposure to commercial property.MMJ Real Estate’s Chris Johnson suggests there is still time for property investors to take advantage of strong commercial property investments in the short term to benefit from price rises.
“There has been a lot of talk in the industry about the increased demand and market competition driving pricing records, and it is likely that we will see pricing records broken in this last quarter of the year," Mr Johnson said.
“We’re expecting commercial property yields to remain attractive in this last quarter compared to residential real estate investments, as well as offshore property and other financial assets.”