Sydney’s rents and capital values on top of the world

Sydney’s rents and capital values on top of the world

17 March 2017

AFR

 

Along with Moscow, Sydney seems to be on top of the world when it comes to rental and capital values. According to JLL research, Sydney is predicted to top global rankings for annual rental growth with increases of between 10 per cent and 15 per cent this year.

This would mean that Sydney’s office market would likely outstrip most forecasts for growth in Sydney’s residential market, already the nation’s strongest.

“Australia is a beneficiary of two major global trends – investment portfolios increasing exposure to real estate, and funds increasing their capital allocations to Asia Pacific,” said Rob Sewell, JLL’s head of office investments.said.

This has been supported with more than $4.7 billion in revaluation gains to the portfolios of REITs during the February results season. Demand for A-grade office space in Sydney’s CBD is very high after vacancy fell to just 5.5 per cent in 2016 in that sector. Vacancy in the broader market hit 7.7 per cent, the lowest vacancy rate across all CBD markets nationally.

Vacancy is expected to tighten further in the face of strong demand. Declining vacancy will drive robust rental growth over the next 12 to 24 months with Sydney now set to be one of the best performing markets globally, according to JLL.

 

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