City should be stable: soothsayers

PROPERTY analysts gazing into their crystal balls have forecast a relatively stable property market for the CBD during the remaining months of this calendar year.

Colliers Jardine research analyst David Cresp said little change was forecast in rents or the vacancy rate.

“The limited supply of premium grade space should see some increases at the lower end of premium grade rents and apply pressure on A grade rents,” he said.

“Yields may tighten slightly due to the limited availability of quality stock.”

After a slow start to the year, CBD sales transactions for 1998 totalled $238 million. This compares to $279 million for the previous year.

A feature of sales during 1998 was the number of off-market transactions that occurred with QV1, 150 St Georges Terrace, 10 William Street and 66 St Georges Terrace all being sold this way.

With the exception of these buildings, the remaining transactions occurred in secondary buildings (lower A grade and B grade buildings) and this sector of the market is expected to be most active in 1999.

While institutions and trusts continue to be keen to gain exposure to the Perth market, there is limited stock available of a suitable size and quality.

A market review by Chesterton International said the CBD market had softened considerably in the past six months, which was expected to influence leasing negotiations with increased competition between the CBD and West Perth office markets.

“Investment demand in West Perth (the major alternative to the CBD) is strong, particularly for quality properties,” the Chesterton analyst said.

The market this year should follow a similar trend to last year which had a number of quality transactions, with investor demand outstripping supply.

Yields should also remain at similar levels, with properties of high growth potential keenly sought after in the marketplace.

The Property Council of Australia said, as at January, around 144,100 squares of space was vacant in the CBD and 25,300 sqm in West Perth.

Since peaking at 31.7 per cent in January 1993, the Perth CBD total vacancy factor has fallen to 11.3 per cent.

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