Off to its slowest start in five years, sales of Australian commercial assets are at their lowest level of activity since 2011 with sales down 31%, research from
CBRE reveals.
Preliminary data shows a low $3.1 billion changed hands in the first quarter showing a relatively subdued start, ahead of what is expected to be a much more active Q2.
[tweet_box]Slowest start in five years, sales of Australian commercial assets are at their lowest level of activity since 2011 research from #
CBRE reveals[/tweet_box]CBRE's Australian Head of Research Stephen McNabb said the subdued start reflected several key factors, including a paring back from a record level of transaction activity in 2014.
[tweet_dis]"We have also seen yield compression sharply concentrated within prime and premium assets, but as yet little compelling reason for owners to sell these assets[/tweet_dis]. However, we are at a point where we expect some domestic investors to look to trade out along the risk curve seeking value add opportunities which would drive higher turnover through the remainder of 2015,"Mr McNabb said.
CBRE's data shows that the office sales activity held up more strongly than retail and industrial sales, with an estimated $2.2 billion in office assets changing hands in Q1, 9% below year ago levels.
CBRE Regional Director of Capital Markets Josh Cullen said he expected office sales to continue to climb, with the potential for 2015 transaction activity to surpass last year's high.
"The Q1 result was primarily due to a lack of available stock and we're certainly continuing to see extremely strong demand from both domestic and international investors," Mr Cullen said.
More subdued during Q1 were the industrial and retail sectors, with sales down 49% and retail 60% respectively. However, CBRE Regional Director of Industrial and Logistics Services Matt Haddon said that, in respect to the industrial market, he expected Q1 would be the "calm before the storm".
[tweet_dis]"We're currently aware of around $10 billion in buyer requirements for Australian industrial assets[/tweet_dis] and of approximately $4 billion in stock that vendors currently intend to bring to the market in 2015," Mr Haddon said.
"This gives us confidence to predict that last year's record of $5 billion in industrial turnover will comfortably be exceeded in 2015, given that more decisions to sell will undoubtably be made in the forthcoming round of mid-year portfolio reviews."Mr Haddon said increased foreign investor activity would help fuel the market, five new global players have entered the Australian industrial & logistics market since late 2014 - those being KWAP, Invesco, M&G, WP Carey and Cache (ARA).
Foreign buyer activity has not been confined to the industrial market, with CBRE's data highlighting that offshore buyers accounted for 45% of all commercial purchases in Australia in Q1. This translated to $1.45 billion in deals - 52% up on Q1, 2014.
