Category

Property Outlook

Date

11 May 2021

Perth Commercial Property Review 2021

Click here for our updated Commercial Property Outlook for 2024.

There’s no doubt that the uncertainty of 2020 left its mark on the commercial property market across the country. We were lucky here in Perth, where the health effects of the pandemic were barely a blip and hard borders kept our state’s economy ticking over. And while our minimal lockdowns affected retail strips, commercial and industrial businesses were often considered essential and able to keep operating.

While some Australian cities saw industrial and commercial real estate transactions drop during the COVID-19 period, Perth’s were up 10.70 per cent, with $828.69 million in industrial property transactions.

All this leads to good news for the Perth commercial property market.

With the rest of Australia now recovering well from the COVID recession, interest rates low, and both state and federal governments investing in stimulus packages, it’s a perfect time to look into the future with our 2021 commercial real estate report 2021.  Here are our 5 big takeaways for this post-pandemic year.

Commercial Real Estate Prices 2021

While 2020 saw small drops in median prices across much of Perth, things are stabilising. Thanks to a long period of low-interest rates, there’s no shortage of money. And as far as investors are concerned, commercial property offers secure long-term income with better yields than bonds. This means we are seeing a lot of investment interest in commercial property and values are holding steady. We expect them to remain stable in the near future, and start increasing over the next 12 months as stock levels are low and the demand remains strong.

Commercial Property Vacancy Rates in 2021

The vacancy rate for commercial and industrial real estate in Perth is low. And with strong demand and low stock, it will decrease even more.

For investors, this means more security and better yields because you are less likely to face lengthy periods with no tenant. And if you can get a new tenant quickly, you will be getting the return on your investment, rather than paying interest on a loan for which you are getting no income. As far as rental returns go, rents have been stable for a while, and we don’t expect big rent hikes. However, low interest rates mean more rent in your pocket, not the banks.

Commercial Real Estate Demand in 2021

We’re seeing strong demand for commercial and industrial real estate in Perth. And stock levels are dropping. We’ve recently received multiple offers on a single property more than once. Strong demand and limited supply tend to lead to price increases over time. This makes commercial and industrial real estate a sound investment option.

Sellers’ Market

For the past few years, the Perth commercial property market has been a buyers’ market. We are at an interesting stage now where we are seeing good demand from buyers and stock levels reducing. We’re watching the market shift to a sellers’ market. But what does this mean in practice?

In a buyers’ market, there are more commercial and industrial properties on the market than there are buyers for those properties. This puts downward pressure on prices to shift stock that may otherwise stay on the market for a while. Although a buyers’ market makes commercial property more affordable, it may also indicate lower growth over the short term. Unless the market improves – which is what is happening in Perth right now.

When there is more demand than supply, properties sell more quickly and at a good price. There is less likely to be negotiating on prices because sellers have the power.

Properties may also sell the list price as buyers compete with each other to secure an investment property.

Perth is currently in that sweet spot between buyers’ and sellers’ market – the perfect time to invest.

It’s also not uncommon for properties to sell above their list price in a seller’s market as buyers compete for the hottest commodities.

Hot Commercial Real Estate Suburbs in 2021

When you think about where to buy your next investment property, you want to have a look at the supply and demand of property in the suburb or area you’re interested in. As specialists in outer-suburban commercial and industrial real estate in Perth’s South East, we get a good idea of the hot suburbs to invest in. We continue to see good demand for the industrial properties both in Welshpool and Kewdale, as well as for smaller properties in surrounding suburbs such as Carlisle, East Victoria Park and Cannington. These suburbs are all easily accessible to Perth airport, freight rail line and major freeways.

Great time to invest in an industrial property 

As you can see from our predictions above, 2021 is shaping up to be an ideal time to invest in Perth industrial and commercial properties. If you are thinking about a warehouse, in particular, there are a couple of facts you should know:

• According to the latest report from the Real Estate Institute of WA, the most affordable Perth regions to buy a warehouse are Perth’s North East and South East, with the lowest cost per square metre.
• The South East accounted for 20 per cent of total warehouse sales across Perth in 2020.

For a detailed breakdown of the Perth commercial real estate market or specific advice on warehouses for sale in Perth, call or email Ross Scarfone Real Estate. Our agents specialise in industrial and commercial real estate in Perth’s southeast corridor including Belmont, Welshpool, Kewdale, Victoria Park and surrounding areas.

 

We would love to help you build your portfolio, contact us today.