Ray White Commercial WA has released its BETWEEN THE LINES report on Western Australia Commercial Investment Activity for the last financial year.

According to the report, Western Australia continued to drive the positive national economic story over the year ending June 2021, with an increase in interest from interstate buyers, local investors and off-shore groups looking to capitalise on the state’s positive momentum. 

For the commercial property market, despite greater certainty emerging with tenants again occupying premises and businesses up and running, many owners are opting to “wait and see” with limited quality stock coming onto the market. Growing demand, combined with downward pressure on yields, aided in encouraging vendors to the market albeit at a slow pace. Lockdowns in January and April did little to stifle  buyers across the country who continue to enquire and look to transact across WA despite the stringent border.

Industrial assets were the standout performer nationally during this pandemic period. Sales transactions were up on last year’s results, albeit with the average 2020/21 sale price of just $1.125 million highlighting the dominance of private investors. Low interest rates fuelled much of this investment, while growing residential prices in Perth have seen many traditional residential investors investigate industrial as an alternative, notably at this lower price point.

While transactions in the office market were down on the prior year, they remained in line with the historic average, propped up by significantly larger CBD transactions in late 2019 and into 2020 prior to COVID-19. The sector saw continued interest from foreign buyer groups, local syndicates and investors as sentiment improved with staff returning to work. A high volume of sub $1 million office suite sales took place across both CBD and suburban locations, with many private investors and owner occupiers making their first foray into commercial property. 

Retail assets were the worst affected commercial asset type. Forced lockdowns and restrictions on trade saw many retailers fold during 2020, leaving large vacancies in both retail centres and local neighbourhood strips. While new businesses are slowly filling these spaces, rents have seen adjustment in some areas while the mix of tenancies we see in centres have changed as clothing & soft goods retailers make way for more food, services and experienced based retailing. 

With no international visitors and strict border closures, this year has been a difficult time to transact a hotel asset. Foreign interest remains high for these assets with several transactions occurring on the East Coast, albeit at yields higher than prior years. Looking ahead we expect to see a rebound in activity levels in the coming years as occupancy levels continue to grow. 

The development market has been a little subdued in recent years as residential prices were pressured down, however as the economy continues to drive forward, significant growth across the residential market is anticipated to spur on development activity. WA has also enjoyed a swift increase in interstate migration, which will increase the need for housing across the state, pressuring this segment of the market again.

Facilities in the medical and childcare sectors have become highly sought after due to the investment tenants make to keep the premises to the required high health and safety standards and the often-above market rents achieved, making them an ideal long term, tenanted investment asset. However, a significant reduction in stock coming to market this financial year saw sales well below that of prior years. 

To download and view the report click here.

Similar to this: 

Two Perth medical centres sold $17.5m+ by Ray White Commercial 

Cottesloe Development Site sold by Ray White Commercial 

Prime Perth High Street retail for sale - Ray White Commercial (WA)