Increased leasing activity and stronger investor support have led to an upswing in growth for the Brisbane CBD, according to Savills Research.

The firm's Quarter Times Report reflects a steady start to the year for the city, with the Brisbane occupier market recording net effective rental growth of circa 2% emerging across varying grade quality of buildings.

The report also highlighted yield contraction over the 12 months to March 2019 of about 25bps across A and B Grade assets.

At a glance:

• Savills Australia has released its Quarter Times Report, showing increased growth in Brisbane's CBD.
• According to the report, the Brisbane occupier market recorded net effective rental growth of about 2%.
• Investment activity across the first quarter for Brisbane was in excess of $1 billion.

Savills Managing Director, Anthony Ott said the data indicated a positive start to 2019.

“Investment activity across the first quarter for Brisbane was in excess of $1billion worth of CBD office assets transacted or formally being offered for sale with at least another $1billion worth of assets earmarked for sale during Q2," he said.

“This follows on from a strong 2018, where sale volumes in the Brisbane CBD totalled circa $2.3 billion.

“There is positive investment sentiment given the level of activity not only in the CBD but also the fringe and suburban markets and this is continuing to flow through in the second quarter with a number of owners positioning to divest."

According to Savills Research, asset values of properties formally marketed in the first quarter of the year were up approximately 50% on the corresponding period in 2018.

Mr Ott said comparative value of Brisbane assets relative to Sydney had been a key factor in driving increased investor demand. 

“There is a capital value spread between Brisbane and Sydney of approximately $10,000 per square metre and a yield spread of approximately 115bps, so the metrics are pretty compelling,” he said.

"New projects and infrastructure activity such as Cross River Rail, Brisbane Metro, Queens Wharf, the second runaway at Brisbane Airport, and the Howard Smith Wharves development will all have a positive influence on investors perspective over the next 5 -10 years.

“These major projects are giving investors’ confidence that Brisbane is entering a new growth phase,” he said.

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