Raine and Horne Commercial

INSIGHTS SPRING 2018 | 28 NSW | Sydney - CBD According to Christian Cirillo of Commercial Sydney CBD, yields on retail property are as low as 3.75%. However, decompression of yields may occur towards the end of 2018 as online sales continue to impact retailers in major shopping centres. Industrial assets are yielding 5.50-6.50%, and a lack of stock across the Sydney fringe markets may cut yields further. Premium grade to B-grade office stock is commanding yields in the order of 4.50-5.50%. Christian notes, “We predict that we are approaching the top of the office cycle regarding face rents in Sydney CBD. Sustaining higher rents could impact demand among tenants, who may look for alternative capital city representation. Vacancy rates are low, generally around 3-4% rising to 4.8% for office space across all grades. Commercial values in the CBD are forecast to rise 10% by the end of 2018 as owner occupiers remain the driving buyer force. Historically low interest rates, higher rents and confidence in commercial property as an asset class are underpinning the strength of the market. In addition, many business owners are taking advantage of tax vehicles such as Self- Managed Super Funds (SMSFs) to invest in their premises. Christian says office strata is his pick of the crop owing to historically high demand, and no pipeline of new supply hi ing the market. These factors will maintain value increases for this asset class. Sydney CBD “ Commercial values in the CBD are forecast to rise 10% by the end of 2018 as owner occupiers remain the driving buyer force. ”